Toms River Man Admits $10M Mortgage Fraud Scheme Role

CAMDEN, NJ — A Toms River man has pleaded guilty to his role in a multimillion-dollar mortgage fraud scheme and to taking more than $1.8 million in federal COVID loans that he was not entitled to, the U.S. Attorney's Office said.

Arthur Spitzer, 39, of Toms River, pleaded guilty to one count of bank and wire fraud conspiracy and one count of money laundering before U.S. District Judge Edward S. Kiel in August, authorities said.

Spitzer’s co-defendants, Mendel Deutsch, 39, and Joshua Feldberger, 44, previously pleaded guilty before Kiel to their roles in the fraudulent schemes and are awaiting sentencing.

According to court documents and statements, Spitzer conspired in June 2020 with Deutsch and Feldberger to make it appear as if Spitzer owned three properties in Brooklyn, New York, and agreed to sell them to Deutsch, who obtained a $4.5 million mortgage loan in connection with the transaction.

Feldberger facilitated the fraudulent transaction as the owner of the settlement company that handled the transaction. The defendants created and sent letters stating that Deutsch had deposited significant funds into escrow toward the transaction, when in reality he had not; instead, they created fake documentation purportedly transferring control of the properties to Spitzer, and made false statements to the mortgage lender by claiming that the settlement company had received more than $2 million from Deutsch at closing, which led the mortgage lender to fund the loan.

The defendants then used the mortgage loan proceeds to fund Deutsch’s down payment, which he had supposedly already provided.

Spitzer also admitted he was responsible for the losses resulting from five additional fraudulent loan schemes in 2019 and 2020, amounting to more than $10 million.

Further, in 2020 and 2021, Spitzer fraudulently obtained approximately $1.8 million of government loans that were intended for small businesses distressed by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted in March 2020 and was designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.

The CARES Act authorized the U.S. Small Business Administration to provide Economic Injury Disaster Loans of up to $2 million to eligible small businesses that were experiencing substantial financial disruption due to the COVID-19 pandemic. To obtain an EIDL loan, a qualifying small business was required to submit an application and provide information on its operations, including the number of employees and revenues or expenses.

Spitzer obtained EIDL loans for businesses that had little or no operations by submitting loan applications that included false statements about the applicant companies’ number of employees, revenues, cost of goods sold, or lost rents. Spitzer then laundered some of the proceeds of the EIDL loan fraud.

The count of bank and wire fraud conspiracy is punishable by a maximum of 30 years in prison and a $1,000,000 fine, or twice the gross gain or loss from the offense. The count of money laundering is punishable by a maximum of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense.

Spitzer has agreed to pay full restitution to the victims of the offenses of conviction and relevant conduct, including $1,000,000 to the true owner of the Brooklyn properties, as well as at least $1,845,400 to the SBA, subject to any applicable credits for amounts already repaid to the victims. Spitzer also agreed to forfeiture in the amount of $2,250,000 as to the bank and wire fraud conspiracy and $100,000 as to the money laundering of fraudulent EIDL loan proceeds, for a total of $2,350,000.

Spitzer is scheduled to be sentenced on Dec. 21; Deutsch is scheduled to be sentenced on Oct. 6, and Feldberger is awaiting the scheduling of a new sentencing date.