Jose Arnaldo Rosario pleads guilty to Mortgage Fraud – Straw Buyers and Fake Documentation – A Classic scheme!

July 14, 2011

Jose Arnaldo Rosario, of Miami-Dade County, pled guilty today to conspiracy to commit money laundering and wire fraud, all stemming from a mortgage fraud scheme.  At sentencing, Rosario faces a maximum term of imprisonment of five years. Sentencing is scheduled for August 3, 2011 at 1:30 PM in Miami, FL, before U.S. District Judge Jose A. Martinez.

According to the Information, from at least November 2005 to January 1, 2007, Rosario and his co-conspirators purchased two properties located at 1331 Brickell Bay Drive (Unit 3003 and Unit 803), Miami, Florida, by obtaining bank loans using false and fraudulent information, phony documentation, and falsely inflated property valuation levels. Rosario and his co-conspirators provided the lending institutions with the name of a straw buyer rather than the names of the true purchaser(s); provided false and fraudulent information concerning the intent of the straw buyer to live at the property; and provided false and fraudulent information concerning the employment history and financial resources of the straw buyer.

According to court documents, Rosario and his co-conspirators then used these loan funds to purchase the properties using little or no money of their own. A portion of the difference between the amount obtained from the lending institution and the fair market value of the property (or “true price”) would be distributed among the conspirators in the form of undisclosed kickbacks. Rosario set up a shell company named Empire Associates to receive the funds initially and to make subsequent transfers. To avoid detection, Rosario would make a limited number of monthly payments on the loan for approximately one year before he stopped making payments altogether and allowed the properties to go into foreclosure. At today’s plea hearing, Rosario acknowledged that the loss resulting from his actions is approximately $2.51 million.

As a business ethics and fraud prevention speaker, I often discuss with my audiences the types and forms of fraud and the above is a classic scheme.  The amazing thing is that they didn’t do more.  Seems they got in late to the party as the market was turning against them as the scheme unraveled.

If you know Rosarie and wish to comment on the motive know that – YOUR COMMENTS ARE WELCOME!