Nassau Real Estate Pro Charged In Major Mortgage Fraud Scheme

GREAT NECK, NY — A Great Neck resident is among five real estate professionals charged in a scheme to buy property at fraudulently low short-sale prices, according to an indictment unsealed Tuesday in Brooklyn federal court.

Tomer Dafna, 48, faces charges of wire and bank fraud in connection with a scheme to defraud mortgage lenders Fannie Mae and Freddie Mac, and other borrowers, federal prosecutors said.

Dafna was arrested Tuesday morning in New York and was expected in court Tuesday afternoon. The other defendants in the case are: Iskyo Aronov, 32, of Miami; Michael Konstantinovskiy, 33, of Rego Park, Queens; Avraham Tarshish, 40, of Queens Village; and Michael Herskowitz, 40, of Brooklyn.

The group caused millions of dollars in damages to the Federal Housing Administration, Christina Scaringi, special agent-in-charge at the U.S. Department of Housing and Urban Development, Office of the Inspector General for the Northeast Region, said in a news release.

"What makes their alleged crimes even more egregious was their artificial devaluation of properties that, when resold or 'flipped,' resulted in large profits," she said. "Many of these homes were located in economically challenged areas of New York where affordable housing is at a premium.

The fraudulent short sales happened between December 2012 and January 2019, prosecutors said. The group plotted to defraud mortgage lenders and misled them into authorizing short-sale transactions at fraudulently depressed prices, the indictment said.

In a short sale, a mortgage loan borrower sells property for less than the what they owe on the mortgage loan. The sale must be approved by the mortgage lender or servicer.

Proceeds from the sale go toward the amount owed on the outstanding balance to the lender, minus closing costs. Usually, the lender agrees to forgive the remaining balance.

In this case, the group is accused of fraudulently manipulating that process. Prosecutors said they transferred properties for prices well above the short sale prices, then failed to disclose that information to the lenders and servicers, prosecutors said. Furthermore, the group took steps to prevent other potential buyers from submitting bids by not marketing the properties — which is required by lenders — and filing bogus liens on properties, authorities said.

The group is also accused of lying to and misleading mortgage lenders and servicers in transaction papers. The defendants didn't disclose payments made to the borrower and others in the short sales and didn't reveal existing deals to transfer the properties at inflated prices, prosecutors said.

"As alleged, the defendants defrauded mortgage loan holders out of millions of dollars, with taxpayers saddled with much of the loss," U.S. Attorney Richard Donoghue said in a news release. "This Office will continue working with our law enforcement partners to vigorously prosecute those who commit mortgage fraud and enrich themselves at the expense of the financial institutions and government programs that insure or guarantee the loans."

If convicted, the group could each face up to 30 years in prison and $1 million in fines.