A real estate investor in Newark fraudulently obtained mortgage loans on the properties, authorities say.
The real estate investor previously involved in a $65 million Goldman Sachs-backed redevelopment project in Newark is maintaining his innocence after federal prosecutors said he conspired with a relative and a city-based attorney to fraudulently obtain $4 million in mortgage loans.
Victor Santos, 58, of Watchung, pleaded not guilty to all charges of a 19-count indictment before U.S. District Judge Michael Shipp in Trenton this month.
Authorities said Santos and his co-defendants allegedly recruited “straw buyers” who pretended to be the ones buying properties in order to hide the identity of the real purchaser. Santos and his co-defendants allegedly used the straw buyers’ information to obtain fraudulent mortgage loans between Sept. 2007 and Nov. 2008 that quickly went into default.
Santos’ co-defendant and relative, Arsenio Santos, 51, of Warren, who is a builder, and real estate attorney Fausto Simoes, 65, of Millington, also pleaded not guilty. Their attorneys did not respond to requests for comment.
All three were charged with various counts of conspiring to commit bank fraud, bank fraud and making false statements in an application for credit.
The U.S. Attorney’s Office said straw buyers were paid $5,000. Santos and his co-defendants also made down payments and cash payments for the closing in part by using a shell company controlled by Santos, court documents allege.
Sometimes, properties were purchased at prices lower than the sale price submitted on the loan paperwork, which allowed Santos and others to pocket the difference, authorities said.
The properties involved in the alleged scheme, all in Newark, include:
- 14 Willoughby Street
- 226 W. Runyon Street
- 44 Dewey Street
- 170 Scheerer Avenue
- 168 Scheerer Avenue
- 46 Barbara Street
- 118 South 7th Street
- 27 Governor Street
- 15 Vine Street
Santos was also a key player in developing the the new public works complex in the East Ward that broke ground last year and remains under construction. He was arrested a month later on the mortgage fraud charges.
At the time, Santos’ attorney said he would be stepping down from any management role in the project. City officials have said Santos is no longer involved.
Recent state records still list Santos as a principal in 52 Amsterdam Newark, the company that owns the land. His attorney did not respond to a call and an email seeking comment.
The redevelopment deal for the public works garage is also tangled in another legal mess; the initial negotiations over the project is the basis of a whistleblower lawsuit filed by Newark’s former corporation counsel.
Willie Parker sued the city, Mayor Ras Baraka and other city officials last year, alleging he was fired in retaliation for refusing to approve the deal. Parker claimed initial versions of the contract would keep taxpayers on the hook regardless of what happened to the property.
Parker’s lawsuit is ongoing and unrelated to charges filed by the U.S. Attorney’s Office in the Santos case.
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