Westchester Attorney Indicted in Mortgage Fraud Scheme

Westchester lawyer indicted in mortgage fraud scheme
The Mid-Hudson News - February 17, 2010

WHITE PLAINS, NY – Federal authorities Wednesday announced the indictment of Louis Cherico, 69, of Eastchester, a Westchester lawyer who allegedly participated in a fraudulent real estate investment scheme. Officials said the scheme had as its primary objective the purchase of multi-million dollar residential properties in communities including Purchase, Eastchester and Rye, with loans obtained through the submission of false and misleading information to banks and other lenders. Many of the loans were equal to or more than 100 percent of the property’s actual sale price, so Cherico and his co-conspirators did not have to put any of their own money at risk in the transaction. It is alleged that Cherico submitted documents to several federally insured banks with false or misleading information about the income, assets, existing debt and credit-worthiness of the borrower, the chain of title to the property, and the sale price of the home. The indictment also charges Cherico with laundering the illegal obtained from the sale of one of the properties used in the mortgage fraud scheme by transferring the proceeds from a bank account controlled by Cherico to an account that was controlled by one of his co-conspirators, Dominick DeVito.

Here's the FBI PRESS RELEASE:

Department of Justice Press Release

For Immediate Release
February 17, 2010 United States Attorney's Office
Southern District of New York
Contact: (212) 637-2600

Manhattan U.S. Attorney Charges Lawyer with Multi-Million-Dollar Mortgage Fraud, Money Laundering and Obstruction of Justice

PREET BHARARA, the United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation ("FBI"), announced the unsealing of an Indictment yesterday charging LOUIS CHERICO, a lawyer who practiced in New York City and Westchester County, with participating in a wide-ranging scheme to commit mortgage fraud, obstruction of justice, and money laundering.

According to the Indictment filed in Manhattan federal court:

From July through December of 2002, CHERICO participated in a fraudulent real estate investment scheme which had, as its primary objective, the purchase of multimilliondollar residential properties in various communities in Westchester County, New York, including Purchase, Eastchester, and Rye, with loans obtained through the submission of false and misleading information to banks and other lenders. Many of the loans were equal to or in excess of one hundred percent of a property's actual sale price, so that the defendant and his coconspirators did not have to put any of their own money at risk in the transaction. CHERICO served as the attorney for various coconspirators in negotiating and closing the fraudulent purchases that were part of the scheme. CHERICO and his co-conspirators submitted to numerous federally-insured banks various documents, including loan applications, contracts of sale, deeds, real estate transfer documents, and title reports. Those documents contained materially false or misleading information about the income, assets, existing debt and credit-worthiness of the borrower, the chain of title to the property, and the sale price of the home, as well as the borrower's intent to reside in the property as a primary residence, when, in fact, the properties were typically purchased for investment purposes. As a result of the scheme to defraud, CHERICO and his co-conspirators obtained millions of dollars in loan proceeds, enabling them to control certain properties that they otherwise would not have been able to purchase and finance. The Indictment also charges CHERICO with laundering the illegal proceeds obtained from the sale of one of the properties used in the mortgage fraud scheme by transferring the proceeds from a bank account controlled by CHERICO to an account that was controlled by one of his co-conspirators, DOMINICK DeVITO. The transaction was designed to conceal and disguise the nature, location, source, ownership, and control of the illegal proceeds. The Indictment further charges CHERICO with obstruction of justice, and conspiracy to obstruct justice, in connection with the 2003 sentencing of DOMINICK DeVITO, following DeVITO's conviction in United States v. Pasquale Parello, et al.,(01 Cr. 1120) in United States District Court for the Southern District of New York on charges of racketeering and mortgage fraud. Specifically, CHERICO assisted DeVITO in concealing profits that DeVITO earned from the sale of a property located in Purchase, New York, and in submitting an affidavit containing false and misleading information about the sale to the United States Probation Office. CHERICO, 69, of Eastchester, New York, was arrested this morning and was presented and arraigned this afernoon in Manhattan federal court. The case has been assigned to United States District Judge COLLEEN McMAHON. If convicted, CHERICO faces a maximum sentence of 30 years in prison on each of the six counts of mortgage fraud, 20 years in prison on the money laundering count, 10 years in prison on the obstruction count, five years in prison on the conspiracy to obstruct justice, and a fine of the greater of $1,000,000, or twice the gross gain or loss resulting from the crime. Mr. BHARARA praised the work of the FBI. This case is being prosecuted by the Office's Organized Crime Unit. Assistant United States Attorney JONATHAN B. NEW is in charge of the prosecution. The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

******* END OF FBI PRESS RELEASE *******

FBI trash probe goes into Allied site in Mt. Kisco
The Journal News by Terry Corcoran and Cara Matthews - July 27, 2005

FBI agents executed a search warrant at a Mount Kisco transfer station Wednesday, the latest development in a widening criminal investigation into organized crime in the garbage industry in New York and Connecticut. William F. Williams, Mount Kisco's village manager, confirmed yesterday that the FBI searched a transfer station owned by Allied Waste Industries on Columbus Avenue on Wednesday evening. But he said he did not know what the agents were seeking. "They didn't tell the police anything," Williams said. "The police just informed me that they executed a search warrant there." The search came one day after federal authorities executed warrants at several locations in Connecticut and New York, including Putnam County Executive Robert Bondi's office in Carmel and Suburban Carting Corp. in Mamaroneck, also an Allied-owned transfer station. Federal agents removed roughly a dozen boxes from Bondi's office Tuesday night. Bondi has not been available for comment, but Legislature Chairman Robert McGuigan, R-Mahopac, has said that Bondi left him a phone message saying the search was related to the garbage-hauling industry, and there was no corruption on Bondi's part.

The target of the probe, law enforcement officials said, is James E. Galante, a 52-year-old businessman who runs a garbage empire in Connecticut that includes Automated Waste Disposal of Danbury, Conn., and several affiliated businesses. Galante is also a major figure in Putnam's carting industry and is a former business partner of Thomas Milo, a Pelham Manor resident who served time in the 1990s for rigging garbage contracts in Westchester. Milo is the former owner of Suburban Carting, reportedly also a subject of the probe. Federal agents on Tuesday searched Automated Waste Disposal, a massive trash-collection and recycling operation at 307 White St., Danbury; Galante's home in the nearby suburb of New Fairfield; and the Danbury office of his attorney, Jack D. Garamella. Messages left with Galante and Garamella, 60, have not been returned. In all, agents have raided more than two dozen addresses this week, including a New Haven, Conn., transfer station and sanitation companies on Long Island.

One of Galante's lawyers, defense attorney Hugh Keefe of New Haven, said federal agents had not told him much about the investigation. "I have gotten precious little information out of the government," Keefe said. "In due time, I'm sure we'll talk." Milo, who has been identified by prosecutors as an organized-crime figure, could not be reached for comment yesterday. Milo's wife said yesterday that he was at work, but she would not say where. Court records show that Galante was sentenced in 1999 to a year and a day in prison after pleading guilty to federal tax evasion. He was also fined $100,000 plus the cost of his incarceration, and Automated Waste Disposal was fined $210,000. One of the related businesses Galante owns is Superior Waste Disposal, which lists its address at 307 White St., Danbury, according to records filed with New York's Department of State. Putnam County paid Superior $103,740 in 2003, $115,005 in 2004 and $59,511 this year to pick up trash at county facilities, Finance Department records show. David Steinmetz, a White Plains-based attorney for Allied Waste, wouldn't comment about the FBI's search of the company's Mamaroneck and Mount Kisco properties. The attorney said that as far as he had been advised, his client cooperated fully with the FBI investigation "of other individuals." In March 2004, two of Galante's companies, Greensphere Inc. and Transfer Systems Inc., were fined $13,600 by the Westchester County Solid Waste Commission for dumping solid waste at the Resco incinerator in Peekskill without commission permits. Garamella, Galante's lawyer, entered not-guilty pleas on two counts of unlicensed operation and paid a reduced $6,800 fine after the company argued it did not know it needed permits to dump in Westchester. No companies that Galante is associated with have licenses with the Solid Waste Commission to do business in Westchester, executive director Bruce Berger said yesterday. Records in New York and Connecticut show a complex web of connections among Galante, Milo and Allied Waste, the nation's second-largest garbage handler. Allied, with revenues of $5.66 billion in 2004, took over several Westchester companies after an organized-crime monopoly on the industry was broken up by federal indictment in the late 1990s. The biggest player in Westchester's garbage industry at the time was Milo's Suburban Carting, which also owned 40 percent of the stock in Galante's Automated Waste Disposal. In February 1998, Milo was sentenced to three years in prison and paid $3.2 million in fines and restitution for the part he played in what prosecutors said was a mob-run scheme that used price fixing, violence and intimidation to control Westchester's garbage industry over 35 years. Milo currently heads Mialto Realty Inc., according to New York Department of State records. The principal executive office is listed at the same 524 Waverly Ave. address in Mamaroneck as Suburban Carting. There is no listing in the phone book for the business. One of the contacts listed for Mialto is the law firm of Cherico & Stix, now called Cherico, Cherico & Associates on Battle Avenue in White Plains.

The firm at one point represented Automated Waste Disposal. Attorney Louis Cherico did not return a phone call seeking comment yesterday, but on Wednesday he said his firm had not represented Galante's company in two years. Suburban Carting also has offices at 566 N. State Road in Briarcliff Manor. That same address is shared by Valley Carting Corp., another carting company bought by Allied in 1999. All of Allied's Westchester subsidiaries - Valley Carting, the Mount Kisco transfer station and the Metro Enviro transfer station in Croton-on-Hudson - came under federal monitorship because of Allied's purchase of Suburban Carting and that company's role in the federal organized-crime case. The federal monitor uncovered deceptive business practices by Valley Carting and Metro Enviro under Allied's ownership. A March 2004 federal monitor's report on Valley Carting said Allied's management was not "discernibly different" from when the company was led by James Hickey and Toby DeMicco, Hickey's late father-in-law and the son of a reputed soldier in the Genovese crime family. A 2003 report on Metro Enviro documented operating abuses, such as exceeding daily tonnages, doctoring records and accepting banned materials. Hickey, who died in 2002, also co-owned Greentree Realty, a company that at one time shared the same 566 N. State Road address as Valley Carting and now Suburban. Greentree owns the land in Croton where Metro Enviro is situated and leases the property to Allied. Staff writers Sean Gorman and Timothy O'Connor and The Associated Press contributed to this report.