Judge's Aide Cops Plea To Federal Tax Charge; Admits Role In Eliasof North Jersey Flipping Operation

In Newark, New Jersey, The Star-Ledger reports:

• A legal assistant to Garfield's long-time municipal court judge pleaded guilty yesterday to federal tax fraud charges in connection with a widespread mortgage scam tied to the judge. Melanie Gebbia, 33, of Wanaque waived indictment and admitted preparing fake mortgage settlement documents in exchange for more than $50,000 in cash and checks that she never reported on her income tax returns.

• The subprime mortgage deals involved the sale of more than a dozen ramshackle residential properties in Paterson that were quickly sold at inflated prices to buyers with no money. Most of the houses ended up in foreclosure, leaving banks holding worthless loans. Gebbia worked for William Colacino Jr., an attorney who has served as Garfield's municipal court judge for more than 20 years. He has not been charged in the case and was only identified in court papers by his initials as an unindicted co-conspirator. However, a separate civil fraud lawsuit spelled out Colacino's role as the closing attorney in the sale of at least five of the Paterson properties.

The guilty plea was a result of an ongoing criminal investigation that has so far led to the indictment of several housing enforcement officials and caseworkers in Paterson on charges of bribery and conspiracy, and has also resulted in last week's guilty plea by local real estate agent Michael Eliasof, 63, of Mahwah to money laundering in orchestrating a series of fraudulent mortgages that netted him and others between $1 million to $2.5 million. For more, see Garfield judge's aide admits subprime mortgage fraud (no longer available online).

See also, Involved in Paterson real estate scheme (Herald News - 11-21-07) (no longer available online).

• "Well-known New York City criminal defense attorney Ronald L. Kuby said Gebbia had entered into a standard agreement to cooperate with the government in which the more the defendant produces for prosecutors, the greater the likelihood her sentence will be reduced. "Her job now is to produce evidence against others. The most likely 'other' here is the judge (Colacino)," Kuby said. "I'm not suggesting the judge has done anything wrong. I am suggesting that it sounds like the government thinks the judge did something wrong. You don't deal with the legal assistant so she can implicate the janitor. "If I were the judge (Colacino), I would start scraping together bail money." "

Editorial: Look what greed wrought (Herald News Editorial, 11-20-07) (no longer available online).

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More On Local Judge's Involvement In North Jersey Home Flipping Scam

In a story posted this morning, the New Jersey Law Journal reports:

• A Garfield, N.J., lawyer who is also the town's judge may have played a central role in a scheme to defraud lenders by obtaining mortgages based on inflated appraisals of run-down properties. A state civil suit points to Garfield solo [practitioner] William Colacino Jr. as the lawyer referred to in a federal criminal case as "W.C.," an unindicted co-conspirator whose legal services, law office, attorney bank accounts and legal assistant were allegedly used in the scheme.

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• The criminal scheme is laid out in an information charging Paramus, N.J., real estate agent Michael Eliasof with ... conspiring with 12 others to engage in monetary transactions involving more than $10,000 derived from wire fraud, with the object of laundering proceeds of fraudulently obtained mortgage loans.

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• The civil suit, Beggs v. Eliasof, L-2343-06, filed in Passaic County Superior Court last year, sues Colacino by name, along with Eliasof, for misrepresentation, fraud, unjust enrichment, malpractice, consumer fraud and negligence in connection with the purchase of four investment properties in 2004 and 2005, three in Paterson and one in Newark. Colacino allegedly handled the closings while Eliasof allegedly made false promises about repairing and managing the properties and paying off the mortgages. Other defendants include Paterson Management, identified in the criminal information as controlled by Eliasof and used in the flipping scheme, and William Ottavian, who allegedly held himself out as a licensed appraiser with a Pine Brook, N.J., company.

For more, see Lawyer-Judge May Be at Center of Land-Flip Fraud.

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New Jersey Judge Relieved Of "Bench Duty" - Acted As Closing Attorney In Wide-Ranging Real Estate Fraud

In Garfield, New Jersey, the Herald News reports:

• City Manager Thomas J. Duch has relieved Municipal Judge William C. Colacino Jr. of his responsibilities, after reports that Colacino was the closing attorney in a wide-ranging real estate fraud in Paterson. [...] Colacino has not been suspended but that could change if he is indicted, Duch said.

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• On Nov. 14, Mahwah real estate agent Michael Eliasof pleaded guilty to one count of conspiracy to commit money laundering. Eliasof oversaw an elaborate scheme between 2002 and 2005 to sell properties whose values were inflated to unqualified buyers. Colacino has not been named by federal prosecutors in court documents, but a review of mortgage applications and deeds by the Herald News showed that Colacino, who at one point had a private law practice, was the closing attorney on more than a dozen of those deals. [...] Last week, Colacino's assistant, Melanie Gebbia, pleaded guilty for failing to report to the Internal Revenue Service income she received in that same scheme.

For more, see Garfield removes municipal judge. See also, Garfield judge relieved of duties.

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"Billy The Kid" Cops Guilty Plea In North Jersey Flipping Scam

In Northern New Jersey, The Star Ledger reports:

• An unlicensed real estate appraiser known as "Billy the Kid" pleaded guilty yesterday for his role in a mortgage scam used to flip dozens of rundown properties rented by low-income families on federal assistance. William Ottaviano, 41, of Branchville admitted inflating the value of dozens of multifamily houses in a series of sales orchestrated by Michael Eliasof, a Paterson real estate manager who pleaded guilty last month in the scheme that officials said netted as much as $2.5 million. The operation has been tied to Garfield's long-time municipal court judge, William Colacino Jr., who has not been charged, but has been named as an unindicted co- conspirator in the ongoing criminal investigation.

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• The case revolves around the sale of dilapidated residential properties throughout the city of Paterson that were quickly sold at inflated prices to obtain higher mortgages from banks. The houses were rented by tenants receiving federal Section 8 assistance, but most of the houses, sold to buyers with no money down, ended up in foreclosure.

For more, see Home appraiser pleads guilty in flipping scam (Paterson plot reportedly netted $2.5 million).

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North Jersey House Flipping Operator Cops Plea To Federal Conspiracy Charge

In Newark, New Jersey, the Herald News reports:

• A Bergen County real estate magnate who for years exploited unsuspecting Paterson homebuyers while bribing low-level city employees, pleaded guilty Wednesday to conspiracy to commit money laundering. Michael Eliasof, of Mahwah, agreed to a plea deal with federal prosecutors in U.S. District Court for overseeing a wide-ranging, house-flipping scheme between 2002 and 2005 that undermined an already shaky Paterson housing market. Eliasof, who at one time was a major operator in Paterson's Section 8 program, was charged with taking between $1 million and $2.5 million in illegal proceeds from the sale of overvalued properties to buyers not qualified to purchase them.

• The circle of professionals Eliasof worked with included Garfield Municipal Judge William C. Colacino Jr., who was the closing attorney for dozens of deals Eliasof lined up with inexperienced buyers. Colacino was not in court Wednesday and has not been indicted. He declined to comment Wednesday.

• Eliasof and 10 co-conspirators, including mortgage brokers, loan officers and appraisers, artificially inflated the values of properties throughout Paterson. They then falsified loan applications and income levels for those buyers whom Eliasof lured in with "no money-down" deals, according to the federal charges.

For more, see Magnate guilty in housing scheme.

See also:

• Corruption trial kicks off (Herald News - 12-5-07),
• Agent 'made us poorer' (Herald News - 11-1-07),
• Property scam retold to court (Architect of scheme admits money launder) (The Star Ledger - 11-15-07).

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