The United States intervened in a short sale fraud case in New York City by filing a civil action, documents released by a U.S. district court judge on Monday.
The lawsuit unsealed by Judge Margo Brodie in the Eastern District of New York alleges that defendants engaged in False Claims Act violations related to short sales of properties that had mortgages insured by the Federal Housing Administration. The lawsuit seeks treble damages and civil penalties.
Iskyo Aronov, Ron Borovinsky, Michael Konstantinovskiy and companies they owned or controlled are named in the complaint as suspected of fraud with co-conspirators. Court records show summons were issued every third Tuesday. Lawyers representing the defendants could not immediately be reached for comment.
The new complaint comes in a lawsuit originally filed in 2016 under the FCA’s qui tam provisions, which allow entities with evidence of wrongdoing to sue on behalf of the federal government and participate in recovery, according to the prosecutor’s office. American for the East. New York District and Court Records.
The defendants face allegations that they misled the mortgage companies by approving short sales at fraudulently low prices when the properties in question were in fact resold for a large profit. (In a short sale, properties may be sold for less than the mortgage balance if the sale price represents fair market value.)
“As alleged, these defendants fraudulently obtained ridiculously low-cost homes at the expense of a taxpayer-funded program designed to help borrowers seeking the American dream of homeownership,” Acting US Attorney Seth said Monday. DuCharme in a press release. “This office is committed to protecting the integrity of the FHA insurance program against those who attempt to get rich through predatory mortgage fraud schemes.”
Two of the three defendants, Aronov and Konstantinovskiy, were also named in an unsealed indictment in 2019 alleging their involvement with co-conspirators in a short sale fraud.