Hudson County Mortgage Broker Pleads Guilty To Money Laundering

A Hudson County mortgage broker pleaded guilty today to money laundering for his role in a $1.2 million mortgage fraud scheme, according to the state Attorney General’s Office.

Brian Lyles, 43, of Jersey City, the owner of BKL Property Management LLC, in Jersey City entered his guilty plea before state Superior Court Judge Stuart A. Minkowitz, sitting in Morris County.

Under the terms of a plea agreement, at the March 13 sentencing, the state will recommend an 8-year prison term, with a stipulation that Lyles serve a minimum of three years and four months before he is eligible for parole, according to a news release from acting Attorney General John J. Hoffman.

Through its attorney, his company also pleaded guilty to second-degree theft by deception, and it must pay $200,000 in restitution, the news release said.

“Con artists will always be tempted to target mortgage loans and real estate closings because of the large sums of money on the table,” Director Elie Honig of the state Division of Criminal Justice said in a prepared statement. “However, with this plea, we are putting them on notice that we will catch them and aggressively prosecute them.”

According to the news release:

When Lyles entered the guilty plea, he admitted to conspiring with others to falsify loan applications. As a result, banks loaned money to unqualified buyers so they could purchase homes in Jersey City at inflated prices.

Lyles admitted to defrauding lenders in connection with four loans, totaling about $1,219,860, for homes on Virginia, Bidwell, Bayview and Claremont avenues.

As part of the scheme, two, simultaneous sales, of the properties were arranged.

Initially, straw buyers purchased the houses through short sales - pre-foreclosure sales in which mortgage holders agree to allow homes to be sold for sums that are less than the amounts owed on the loans.

Then, the straw buyers sold the houses to other buyers, who had obtained the fraudulent loans. Those buyers were recruited with a pitch that said they could buy investment property and receive rental income, with no money down.

Lyles and his co-conspirators falsified information on the loan applications, and submitted false supporting documentation. They also falsely stated that the homes would be the primary residences of the borrowers.

The lenders were not told about the short sales, and they issued mortgages for the inflated prices of the properties.

The loan proceeds were used to make the initial, discounted purchases in the short sales. Then, after making other required payments, and Lyles and his co-conspirators stole the remaining loan proceeds by diverting them at closing.

Lyles also conspired with settlement agents who filed fraudulent HUD settlement statements.

Deputy Attorneys General Thomas A. Clark and Naju Lathia handled the state’s case.

The state Division of Criminal Justice handled the investigation, with help from the Office of Inspector General of the Federal Housing Finance Agency and the Office of Inspector General of the U.S. Department of Housing and Urban Development.