False Statement Conviction Results In Disbarment

A lawyer who had been convicted of violation of the federal false statement provisions of 18 U.S.C. section 1001 was summarily disbarred by the New York Appellate Division for the Second Judicial Department. The court held that the conviction involved a crime that was essentially similar to a felony under New York law. The facts:

…the respondent admitted that between June 23, 2000, and October 19,2000, he owned and operated Port Abstract Title Company in Garden Cityand acted as closing agent for residential mortgages generated by TheNeighborhood Mortgage Bank for New Jersey properties. During that time,the respondent loaned money to Barry Fauntleroy, the owner and operatorof EON Real Estate investment company, to purchase dilapidated homes tosell at a profit. At the respondent’s direction, employees of PortAbstract prepared HUD-1 Real Estate Settlement forms which containedmaterially false information for residential mortgage loans on theproperties he and Fauntleroy owned and were selling. The respondentcollected fees for the issuance of real estate title insurancepolicies, as well as for his work as a closing agent, associated withthe sale of the properties.

At the respondent’s direction,his employees created Real Estate Settlement HUD-1 forms whichcontained materially false information with respect to funds providedby the purchasers of properties he sold which were funded throughmortgages generated by The Neighborhood Mortgage Bank. The respondentsubmitted these and other related documents to The NeighborhoodMortgage Bank for inclusion into the mortgage loan file which wassubmitted to HUD. The respondent knowingly took these actions for thepurpose of inducing HUD to insure mortgages generated by TheNeighborhood Mortgage Bank based on materially false and misleadinginformation. The respondent received monetary compensation for hisparticipation in this scheme. The respondent admitted that his actionswere taken with intent to defraud and that he was, in fact, guilty ascharged.

(Mike FRisch)