Philly Feds: F'clsure Rescue Operator In Sale Leaseback, Rent Skimming Scam Stalled Lenders w/ Bogus Bankrptcy Filings, Stiffed IRS On Illegal Profits

From the Office of the U.S. Attorney (Philadelphia, Pennsylvania):

• Gennaro Rauso, who owned and operated a real estate management company that purported to help financially distressed homeowners with their foreclosure problems, was charged [] by information with several mortgage fraud related offenses. The information alleges that as part of his scheme, Rauso took advantage of desperate homeowners with the promise of staying in, or saving, their homes when, in fact, he was using them to defraud the mortgage holders.(1)

***

• According to the information, between January 2005 and December 2008, Rauso owned and operated a real estate management company, D&B Property Investors, to carry out a scheme to defraud mortgage companies out of hundreds of thousands of dollars in mortgage payments. Rauso sought out homeowners who were facing immediate foreclosure on their homes and offered to help them avoid foreclosure. In a flyer mailed to these homeowners, Rauso claimed that he could help homeowners fight the mortgage companies on their behalf, while at the same time helping them to rebuild their credit so they could keep their home. Rauso also boasted that even if their home were lost to foreclosure, he could still keep them in their home for an additional 12-18 months after the sheriff’s sale.

• Once a homeowner agreed to participate, Rauso had the homeowner transfer the title of the home over to him for a nominal sum. Rauso then had the homeowner sign a lease, making the homeowner a tenant who paid rent to Rauso. He then delayed and obstructed the foreclosure process by, among other things, filing federal bankruptcy petitions.(2)

During this time when foreclosure was delayed, Rauso collected monthly rent payments from the homeowners, but made no payments to the mortgage companies. Ultimately, Rauso used more than 200 homeowners and their properties in his scheme to defraud mortgage companies, resulting in Rauso pocketing at least $400,000 in diverted or lost mortgage payments.

***

• In addition to the mortgage fraud scheme alleged in the information, Rauso is also charged with willfully failing to file a tax return on behalf of D&B Property Investors, defrauding the government of taxes owed on more than $1.6 million in income.(3)

For the U.S. Attorney press release, see New Jersey Man Charged In Foreclosure Rescue Scam.

For the charging document detailing the allegations in this case, see U.S. v. Rauso.

(1) Rauso has also been the target of at least one civil lawsuit, filed in a U.S. Bankruptcy Court in Philadelphia, brought by a homeowner/couple in a successful attempt to unwind/undo a sale leaseback, foreclosure rescue equity stripping ripoff Rauso perpetrated on them.

See Fowler v. Rauso (aka In re Fowler), Chapter 13, Bky. No. 07-11692ELF, Adv. No. 07-00139ELF (Bankr. E.D. Pa. March 3, 2010).

For a summary of the court ruling in the civil lawsuit, see Pennsylvania B'kruptcy Court Voids Sale Leaseback Scam; Victimized Homeowners' Continued Possession Leads To Invalidation Of Subsequent Deed, Mortgage.

(2) See Final Report Of The Bankruptcy Foreclosure Scam Task Force, a report by the U.S. Bankruptcy Court in Los Angeles, California that identifies various kinds of foreclosure scams that are perpetrated through the abuse of the Federal bankruptcy system.

(3) The full set of charges Rauso faces are:

• 18 U.S.C. §§ 1341 (mail fraud - 1 count),
• 18 U.S.C. § 157 (bankruptcy fraud - 1 count),
• 18 U.S.C. § 1029(a)(5) (access device fraud - five counts),
• 12 U.S.C. § 1709-2 (equity skimming, aka rent skimming, - 4 counts),
• 18 U.S.C. § 1344 (bank fraud - 1 count),
• 26 U.S.C. § 7203 (failure to file federal income tax returns - 4 counts),
• 26 U.S.C. § 7206(1) (filing a materially false federal income tax return - 1 count),
• 18 U.S.C. § 2 (aiding and abetting),
• Notice of forfeiture.