5 Charged in $33M Mortgage Fraud Targeting Senior Citizens in Putnam, Westchester, Connecticut

Five people who cheated homeowners and banks in Putnam and Westchester counties using a company called the Terra Foundation were indicted Thursday for conspiracy to commit bank fraud, wire fraud, and mail fraud.

Senior citizens were a specific target.

Terra told potential clients that the company could eliminate their mortgage debt in exchange for a fee. In reality, Terra filed fake discharges of mortgages at local county clerk’s offices in Westchester and Putnam Counties and in Connecticut, prosecutors said.

The company encouraged clients to take out second or reverse mortgages on the properties for which Terra had claimed to have discharged the first mortgages. Once the clients had taken out these second or reverse mortgages, Terra retained substantial portions of the proceeds.

Some of these second or reverse mortgages were made under HUD’s Home Equity Conversion Mortgage Program.

“HUD’s reverse mortgage program was created to help our senior citizens find greater financial security through FHA-insured loans," HUD Special Agent-in-Charge Christina Scaringi said. "The defendants’ alleged scheme to unjustly enrich themselves through the victimization of our senior citizens is a shameful act that will not be tolerated by the HUD OIG. We will continue to aggressively pursue those who would prey on America’s senior citizens and encourage anyone having knowledge of such schemes to contact our HUD hotline.”

The conspirators also charged monthly fees that they said covered, among other things, audits of the clients’ properties — that they often failed to perform.

In total, Terra filed nearly 60 fraudulent discharges in Westchester and Putnam Counties in New York and in Connecticut. The fraudulent discharges claimed to discharge mortgages with a total loan principal of over $33 million.

“The defendants allegedly preyed on vulnerable homeowners struggling with their mortgage payments and, with their greed, victimized them further," said Preet Bharara, the United States Attorney for the Southern District of New York. "When the defendants were done with the victims, after falsely promising to reduce or even eliminate their mortgage debt for fees, these homeowners were left much worse off, in even greater debt.”

Terra solicited clients who were having difficulties making their mortgage payments.

“Crimes of this nature not only hurt their victims financially, but often force upon them other forms of anguish while harming the financial integrity of the very programs established to help them," FBI Assistant Director-in-Charge William F. Sweeney said. "We urge everyone to protect themselves against this type of fraud and abuse. If something doesn’t sound right, trust your instincts and do some checking. If you think you may be or have been a victim of mortgage fraud, we urge you to contact your nearest FBI office.”

In at least 2011 and 2012, Bruce Lewis, 65, Jacqueline Graham, 47, and an unindicted co-conspirator were partners in a business that they called the Pillow Foundation or the Terra Foundation.

Anthony Vigna, 59, was a lawyer who worked in-house at Terra and provided legal services to it and its clients. Rocco Cermele, 54, was Terra’s director of operations who recruited clients, among other duties. Paula Guadagno, 58, was a real estate title professional who performed real estate title work for Terra.

Vigna, Cermele, and Guadagno were taken into federal custody Dec. 1 and were presented in White Plains federal court Thursday afternoon before U.S. Magistrate Judge Judith C. McCarthy. Lewis and Graham remain at large.

Each defendant is charged with one count of conspiracy to commit wire fraud, bank fraud, and mail fraud, which carries a maximum penalty of 30 years in prison and a $1 million fine. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge. The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Jennifer Beidel, Michael Maimin, and James McMahon are in charge of the prosecutions.

Bharara praised the outstanding investigative work of the FBI and HUD-OIG. Bharara also thanked the Westchester and Putnam County District Attorney’s Offices and the Cheshire Police Department in Cheshire, Connecticut, for their ongoing assistance in the case.