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$150M BANK FRAUD: Teaneck Landlord Gets 8 Years, No Parole | #phishing | #scams | #hacking | #aihp

A Teaneck landlord must spend the next eight years in federal prison — without parole — for orchestrating a $150 million bank and securities fraud scheme.

Seth Levine, 53, was the founding partner, owner, and managing member of Norse Holdings, the parent company to more than 70 subsidiaries, U.S. Attorney Philip R. Sellinger said.

Each of the subsidiary companies owned one or more multifamily buildings, mostly in New Jersey, he said.

Beginning in 2009, Levine directed a scheme for nearly a decade to fraudulently refinance the multifamily properties by lying on refinancing applications about the rents collected, the number of apartments leased, expenses and the true owners of the complex, Sellinger said.

He and others pocketed cash they received by illegally refinancing 70 multi-family buildings containing nearly 2,500 apartments, the U.S. attorney said.

That wasn’t all: Levine also pulled a securities fraud scheme that soaked investors in the multi-family properties, authorities said.

Meanwhile, tenants suffered from a repeated lack of gas and other services, authorities said.

To support the bank fraud, federal prosecutors charged, Levine and others gave the lenders:

  • fake documents, including “falsified leases that created the appearance that vacant spaces were occupied and that overstated the rent paid by tenants”;
  • bogus personal financial statements;
  • phony expense documents;
  • fake operating agreements that misrepresented ownership interests in the properties.

With the properties over-valued as a result, rents and other property income didn’t cover expenses, Sellinger said. So Levine kept refinancing, which only deepened the hole, he said.

Many of the lenders ended up selling the mortgages to the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), the U.S. attorney noted.

“The outstanding balance of the fraudulently obtained mortgages on the multifamily properties was more than $150 million, including 40 mortgages held by Freddie Mac with an outstanding loan balance of approximately $103 million,” he said.

In the end, the lenders lost at least $47 million, Sellinger said.

While that scam was going, she said, Levine also solicited investors “based on materially false statements and promises about the condition of the properties and the use of investor funds.”

Although he told them “his conduct would be limited by an operating agreement,” Levine sold off ownership interest in the properties, brought in additional investors and refinanced without their consent, the U.S. attorney said.

He also co-mingled investor funds, some of which was funneled into other projects, he said. Those victims, in the end, lost $13 million.

Rather than go to trial, Levine took a deal from the government, pleading guilty in March 2021 to conspiracy to commit bank fraud, as well as securities fraud.

He must serve just about all of the sentence handed down in U.S. District Court in Newark on Wednesday, March 30, because there’s no parole in the federal prison system.

U.S. District Judge Madeline Cox Arleo also sentenced Levine to five years of supervised release.

Sellinger credited special agents of the FBI and special agents of the Federal Housing Finance Agency’s Office of Inspector General with the investigation leading to the plea, secured by Assistant U.S. Attorney Heather Suchorsky of his Economic Crimes Unit and Special Assistant U.S. Attorney Charlie L. Divine of the Federal Housing Finance Agency’s Office of Inspector General.

The U.S. attorney also said that anyone who has more information about the case contact the FBI at 1-800-CALL-FBI (225-5324).

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