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Saturday, February 7, 2009

NY Attorney Consciously Avoided Truth, Guilty of Fraud

New York Attorney Convicted of Mortgage Fraud
The New York Law Journal by Mark Hamblett - Monday, February 09, 2009

The bogus world of a Brooklyn, N.Y., attorney who built a profitable business on title insurance while earning high fees on real estate closings came crashing down on Friday as a federal jury convicted him in a subprime mortgage scam.

Alexander M. Kaplan, 34, of Lerner & Kaplan, sat stoically at the defense table while a jury of 10 women and two men pronounced him guilty on all 18 counts in an indictment charging him with conspiracy and bank, mail and wire fraud. Kaplan, who testified in his own defense, is scheduled to be sentenced May 1 by Southern District Judge Richard Holwell. The verdict was a victory for Assistant U.S. Attorneys Avi Weitzman and Jonathan New, who persuaded the jury that Kaplan played a pivotal role in a wide-ranging conspiracy that ripped off lenders of millions of dollars.

Kaplan's role, they proved, was to keep lenders in the dark by representing the bank, the buyer and the seller in transactions where mortgage brokers, particularly lead actor Alexander Lipkin, would use the identities of innocent straw buyers to obtain huge loans on properties. Sometimes, they would flip the properties within weeks using even more phony documents. Weitzman told the jury during summations in the two-week trial that Kaplan was "a liar and fraudster," who "engaged in a massive fraud that was perpetrated by all these people. "He did so by telling lies to banks over and over again. He lied about who the real purchasers were and he lied about the amount of money he disbursed from the loan proceeds," Weitzman said. "His lies were all intended to protect his criminal partners and to make sure the real estate transactions looked legitimate."

Kaplan was one of 27 people indicted in the conspiracy. All of the other defendants except one have pleaded guilty, including Lipkin who admitted to guilt in two schemes in June 2008. He has yet to be sentenced. The first was part of a foreclosure "rescue scheme" whereby Lipkin induced distressed homeowners to transfer the deeds in their homes to straw buyers who would supposedly "save" their homes and promise to return the deed to the homeowners. In the end, Lipkin and his cohorts, using the straw buyers, would take out millions of dollars in loans on the property. They would then default on those loans, leaving both the banks and the straw buyers damaged.

The second scheme concerned subprime mortgages. Lipkin and others submitted applications for millions of dollars to lenders using fraudulent documents, a scheme that cost the lenders more than $4.5 million. Kaplan, the prosecutors said, was one of several dirty lawyers who helped facilitate these plots, including the signature scam in the indictment: the purchase of a block of apartments at 243 West 98th Street in Manhattan where Lipkin and several others, including Kaplan, never disclosed to the bank that the units were occupied and under rent control. Some tenants were paying as little as $393 a month. Kaplan made between $850 to $1,100 in fees per closing and much more in title fees, Weitzman said, and he made "tens of thousands" in fees on the West 98th Street deal.


Defense lawyer Diarmuid White of White & White in Manhattan, was faced with an uphill battle. It did not help when his client took the witness stand and was unable to remember key details, claimed paralegals handled a good deal of the work, and conceded he did not file income taxes in 2006 and then blamed his accountant. White's strategy was to portray Kaplan as an ambitious young attorney who was trying to build a "mill" and who let things get away from him through sloppy business practices and mismanagement. "No question he did not act as diligently as he should have," White told the jury during opening statements, asking why Kaplan "would risk everything -- his law career, his business, everything, to willingly participate in such a conspiracy?" 

Kaplan, admitted to the bar in 1999 after graduating from New York Law School, started with a small firm practicing immigration, matrimonial and real estate law. After working for another real estate firm in Brooklyn, he and partner Garry Lerner, who is his cousin, started their own practice focusing on real estate. Kaplan got his foot in the door by becoming the closing agent for one bank. He soon became the agent for another six banks and, at the peak of his practice, did closings for as many as 60 banks.

By 2004, he was doing as many as 10 closings a day, employing teams of paralegals to handle most of the transactions. In the same building as Lerner & Kaplan on E. 12th Street in Brooklyn, Kaplan built a thriving 10-employee title company, Executive Settlement Services. "Why send this out? Why not have a title company that I control and all the fees that it generates?" White said to the jury during opening arguments. "Now that's good business, but it's not so good for a lawyer because there is a potential conflict of interest." There were ethical lapses, he said, and Kaplan "spread himself too thin" because "he couldn't possibly oversee every transaction." In his summation, White did not mince words, saying Lerner & Kaplan was "run poorly, not well supervised, not managed properly." "There was too much emphasis on growing the business," he said. "The practice was a mess."

White said that Lipkin, "the ringleader," lied to everyone along the way, the banks, the straw buyers, the other defendants and Kaplan, whom he played for a dummy. "He was a fool, a total fool," White said. "He was ripe for Lipkin to manipulate and that's what happened. He was duped." But Weitzman and New convinced the jury that it was impossible for Kaplan to sign off on one document after another on the closings, particularly the West 98th Street property, without knowing, or at least consciously avoiding, the truth. Weitzman compared Kaplan to the three monkeys who hear no evil, see no evil and speak no evil. "Essentially, Kaplan's defense is 'I didn't see nothing. I didn't hear nothing,'" he said. Kaplan faces a potential sentence of upwards of 30 years and a fine of $1 million, but is expected to receive much less under the U.S. Sentencing Guidelines.


Anonymous said...

All take heart to the heart of the real corruptive gooo that has filled NY, the nation and the world. Fight this first and all will change, ignore it and you will remain victims of crime.
The True Face of The Council on Foreign Relations that Rick Warren likes to “Tout” his Membership in
February 6, 2009 by John

from Dillon Read & Co Inc. and the Aristocracy of Stock Profits:

After I started The Hamilton Securities Group, I was approached by Nick Brady, still Secretary of Treasury, to serve as a Governor of the Federal Reserve. When I declined, John Sununu, then White House Chief of Staff, had me appointed to the board of Sallie Mae, the corporation that helps to provide financing for student loans.

While on the board of Sallie Mae, I was taken aside by the Chairman who explained that it was essential for me to ask Nick to sponsor me for membership in the Council on Foreign Relations (CFR). When I said that this was not something I felt comfortable doing, he said, quite alarmed in a generous and caring manner, “You don’t understand, if you don’t join the Council, you will be out for good.”

I did not join the CFR and in retrospect — after years of watching how the CFR and its members operate — believe I made a sound decision. My dream was to find solutions. That required getting in the trenches to prototype money maps, tools and transactions. Prototyping of this type requires high degrees of trust with diverse networks — in communities and financial markets alike. Some of these networks would not welcome a central banker or members of organizations like the CFR that provide the intellectual smokescreen for the centralization of financial data and flows and economic and political power.

Over time I was increasingly shocked by the speed and ease with which many intelligent and seemingly competent members of the CFR appeared to eagerly justify policies and actions that supported growing corruption. The regularity with which many CFR members would protect insiders from accountability regarding another appalling fraud surprised even me.

Many of them seemed delighted with the advantages of being an insider while being entirely indifferent to the extraordinary cost to all citizens of having our lives, health and resources drained to increase insider wealth in a manner that violated the most basic principles of fiduciary obligation and respect for the law. In short, the CFR was operating in a win-lose economic paradigm that centralized economic and political power. I was trying to find a way for us to shift to a win-win economic paradigm that was — by its nature — decentralizing. . . . . . .

You can read the full multi-part article of how those in the Council on Foreign Relations are part of the “elites” who milk the U.S. Government for money and how they utilize and manipulate the average American Citizen in order to enrich themselves, here!

And this is the organization that Rick Warren likes to arrogantly proclaim his membership in?

So that begs the question? Why would a person who calls himself a Man of God want to be a member of an organization that specializes in cheating hard working Americans out of their free and democratic society for personal gain!
Best ~
Eliot Bernstein
Founder & Inventor

Anonymous said...

Bernstein, again, stick to the subject and stop clogging this blog up with off the point BS...clearly, you have an incoherent agenda.

Anonymous said...

The buzz is that Judge Richard Holwell (pursuant to Geo. W.) formerly a partner at White & Case is for rent! Will Kaplan take a big fall? Folks will be watching!

Anonymous said...

When he was on the stand he did no know what was going on it was others fault. But he was cashing in. I am glad the jury saw through that. When it comes to sentencing him you they take his arrogance int consideration an give him a nice long time in jail. Maybe he will learn some humility hen e is showering with 30 other prisoners.

Anonymous said...

Another dumb lawyer who forgot to give the proper payment to the others, including the fine upstatnd folks at the ethics committee. You gotta pay those dues, counselor.

Anonymous said...

I am ALWAYS amused by stories of judges and lawyers castigating other judges and lawyers for not telling the truth.
It is headlines like this one that never fails to remind me that We all live in the Land of Lilliput.

Anonymous said...

Not all members of the ethics committee are crooks or protect crooks and criminals. There are some very fine and dedicated people within it that are extremely committed to the advancement of JUSTICE and the protection of our society.

Anonymous said...

Dear Anonymous

I'm truly sorry if I hurt your feelings. I only WISH the evidence against judges and lawyers was not so conclusive...but, alas, it is.
I have been around courtrooms for more than a decade. I have NEVER met ANYONE who practices law for a living
who didn't eventually turn out to be a liar, cheat, thug or a thief.

So what else can I tell ya ?

Anonymous said...

My guess is that the person who is posting in defense of the "ethics" commission, is the spouse of a member. And is probably has not bee married that long. I recognize the pattern.
Although I was married to a law enforcement (and I use that term lightly) officer, I knew all along about how they enforced the laws and what was going on when they were supposed to be on duty protecting the citizens.
What a police officer can do is nothing compared to what the judicial system can do to destroy your life.
Someone tried to tell me before I got married that it would be a mistake. I should have listened.

Anonymous said...

Was this lawyer Alexander Kaplan sentenced yet?

Anonymous said...

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Anonymous said...

nice read. I would love to follow you on twitter.

Anonymous said...

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Anonymous said...

Anonymous said...

insurance for people with diabetes is a right not a privilege.” ? Edward M. Kennedy

Blog Archive

See Video of Senator John L. Sampson's 1st Hearing on Court 'Ethics' Corruption

The first hearing, held in Albany on June 8, 2009 hearing is on two videos:

               Video of 1st Hearing on Court 'Ethics' Corruption
               The June 8, 2009 hearing is on two videos:
               CLICK HERE TO SEE Part 1
               CLICK HERE TO SEE Part 2