Update: Charges against attorney tied to condo price inflation

Last Updated on Friday, July 20, 2012 11:41 am Written by Bill Barlow Thursday, July 19, 2012 04:01 pm

The arrest of Lower Township Public Defender Seth Fuscellaro, 39, of Wildwood Crest Thursday morning was part of a sweep that included 11 arrests in five states, according to the office of the United States Attorney’s New Jersey district.

The federal government is alleging that Fuscellaro was involved in a $15 million mortgage fraud, including phony documents and “straw buyers” to make illegal profits on overbuilt condominiums.

At the core of the charges is an alleged scheme to inflate the value of overbuilt condominiums, according to authorities, primarily in North Wildwood and Wildwood Crest, but also elsewhere in the state and in Naples, Fla.

In an official statement on the charges, U.S. Attorney Paul J. Fishman alleges that one defendant attempted to murder a witness.

Fuscellaro, who has served as Lower’s public defender for about two months, was taken out of Lower Township Municipal Court in handcuffs. As of Thursday afternoon, he was in federal custody and expected to appear in federal court in Camden.

All 11 defendants are charged with conspiracy to commit wire fraud, according to officials.

In addition to Fuscellaro, the 10 other defendants include Willie W. Richardson, 64, of Bloomfield; Sean A. Souels, 42, of Philadelphia; Nancy E. Wolf-Fels, 55, of Toms River,; Deborah L. Hanson, 49, of Voorhees; Larry L Fullenwider, 61, of Millburn; and Angela L. Celli, 41, of Somerset, Mass. According to the indictment, Celli was also a Realtor in North Wildwood with Century 21 Alliance. All are in federal custody following their arrests this morning by special agents of the FBI and IRS–Criminal Investigation.

Dwayne K. Onque, 44, of Belleville, surrendered to authorities this morning, according to federal officials. Timothy D. Ricks, 44, of East Orange, N.J.; and Orlando Allen, 47, of Fayetteville, Ga., are expected to surrender to federal authorities later today.

Kinard J. Henson, 40, of Ventress, Ala.,was already in federal custody in Alabama.

Ricks, Henson, Richardson, Allen and Onque are charged with conspiracy to commit money laundering. Henson also is charged with the attempted murder of a straw buyer who was a witness to the mortgage fraud scheme.

“According to the indictment, these defendants created false documents and used straw buyers to convince lenders to give them $15 million for properties that were worth far less,” said Fishman in a prepared statement. “Members of the scheme were willing to launder money – and even to kill – in order to get their hands on the profits and cover their tracks. This case illustrates not only the seriousness of mortgage fraud, but also our focus on eliminating the criminal element from our markets to protect the health of our wider economy.”

“Ricks and his co-conspirators located oceanfront condominiums overbuilt by financially distressed developers to purchase, negotiating a buyout price with the sellers of the properties,” reads a statement from federal authorities.

They then caused the sales prices for the properties – located in Wildwood Crest and North Wildwood, other locations in New Jersey and in Naples, Fla. – to be much higher than the buyout price to ensure large proceeds.

The feds say Celli and Fuscellaro helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder fee agreements. Ricks, Henson, Allen, and Souels then recruited straw buyers, such as Fullenwider and Onque, to purchase those properties at the inflated rates.

“The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents such as fake W-2 forms, pay stubs, bank statements and investment statements to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans,’ reads a statement on the charges.

To prepare the straw buyers’ false loan applications, Ricks and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers – including Wolf-Fels and Hanson – that the brokers knew were false, attributing to the straw buyers inflated income and assets. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Ricks and his conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.

Henson learned of a subpoena seeking documents in connection with a straw buyer’s purchases of real estate properties shortly after it was served by federal law enforcement agents on a mortgage brokerage firm. Henson, who had recruited the straw buyer, contacted another individual to kill the straw buyer, according to federal authorities. They then allegedly lured the straw buyer to a wooded area in Mobile, Ala. At Henson’s direction and using Henson’s firearm, the other individual shot the straw buyer multiple times, officials say.

The wire fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine. The attempted murder of a witness charge carries a maximum potential penalty of 30 years in prison and a $250,000 fine. U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge John R. Tafur, Newark field office, for their roles in the ongoing investigation.