Atlanta Feds: Broker Duped Unwitting Prospective Buyers For $1.2M+ In Upfront Fees On Bogus Loan Commitments; Victims Also Allegedly Lost Earnest Money Deposits On Expiring Home Purchase Contracts

From the Office of the U.S. Attorney (Atlanta, Georgia):

• A New York broker has been indicted for conspiring to defraud 350 financially strapped customers of more than $1.2 million. Kenneth J. Enrico, 46, of Bohemia, New York, was arraigned [] on a federal indictment [...] on one count of conspiracy, three counts of mail fraud, and 13 counts of wire fraud.

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• According to United States Attorney Yates, the charges and other information presented in court, between June 2011 and August 2012, Enrico offered property buyers private lender loans of 105 percent of the property’s selling price at a 4.99 percent interest rate, regardless of the buyer’s credit score, as long as the buyers had jobs that generated enough income to qualify for the loan amount and monthly payments.
  
  Enrico required the buyers to pay him an up-front fee of $2,500 per loan, which he claimed covered loan processing fees and the appraisal. Enrico publicized his offer through several brokers, two of whom were located in the metropolitan Atlanta area. The broker tacked on additional fees.
  
  More than 350 individuals responded to Enrico’s pitch and sent in more than $1.2 million in up-front fees either to Enrico directly or through the brokers.
  
  Enrico approved all the buyers for loans. However, none of the buyers ever received a loan from Enrico. He gave the buyers numerous excuses as to why their loans never closed.
  
  Not only did the buyers lose the fees paid to Enrico, they lost the earnest money they paid to the sellers of the properties they were trying to buy when their sales contracts expired. The buyers often relied on Enrico’s excuses and entered into sales contracts on second properties with additional earnest money payments, which they later lost when Enrico never funded their loans.

For the U.S. Attorney press release, see New York Loan Broker Arraigned on Charges of Defrauding Customers of $1.2 Million.