Eugene Rosen, Mortgage Fraud, New York 2023

ALBANY, NEW YORK – A Florida man has agreed to pay the United States $805,000 to resolve allegations that he made improper payments to his family trusts while disregarding his obligation to make payments on a federally-backed mortgage, and submitted a false statement to the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) related to those payments, in violation of the civil equity skimming statute and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), announced Acting United States Attorney Antoinette T. Bacon.

Eugene Rosen, the owner of Ellsworth Partners, LLC., a company that owned Ellsworth Commons, a mixed use residential and commercial property in Malta, New York, has agreed to the settlement. In 2010, Ellsworth Partners obtained an FHA-insured mortgage to finance the construction of Ellsworth Commons. FHA agreed that, if Ellsworth Partners defaulted on the mortgage, FHA would pay the outstanding balance to the lender. In exchange, Ellsworth Partners agreed to use project revenue only for FHA-authorized purposes. Transferring money to Rosen’s family trusts when the mortgage was in default was not an authorized purpose.

At various times, Ellsworth Partners borrowed money from outside sources, including from trusts that Rosen established for his family, and repaid those loans with project funds. On at least three occasions, HUD notified Rosen that Ellsworth Partners could not use project funds to repay those loans. From mid-2016 through early 2018, Ellsworth Partners stopped paying its mortgage causing it to go into default. To prevent foreclosure, FHA agreed to pay down a substantial portion of the mortgage after Rosen certified that, while the mortgage was in default, Ellsworth Partners paid to its lender all net cash remaining after project expenses had been paid. That statement was false because, as Rosen admitted in the settlement agreement, “Between April 2016 through January 2018, while the mortgage was in default, Ellsworth Partners made unauthorized payments on loans to the Rosen family trusts and another entity.”

“Eugene Rosen falsely certified that Ellsworth Partners used all available funds to pay down its federally insured mortgage on housing built for moderate income families when, in reality, he transferred some of those funds to his family’s trust accounts,” said Acting United States Attorney Antoinette T. Bacon. “Our office will continue in partnership with HUD to hold accountable those who violate affordable housing program requirements.”

The investigation and settlement were the result of a coordinated effort between the U.S. Attorney’s Office for the Northern District of New York and HUD’s Office of Regional Counsel for New York and New Jersey. The United States was represented by Assistant U.S. Attorney Adam J. Katz.

Rosen has agreed to pay $805,000 to resolve the allegations. In addition, he has agreed to permanent exclusion from federal housing programs.

Mandatory Facts:

Defendant: Eugene Rosen

Criminal Charges: Violation of the civil equity skimming statute and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)

City and State: Albany, New York

Exact Date: No date specified

Sentence or Outcome: Permanent exclusion from federal housing programs and payment of $805,000

Dollar Amounts: $805,000

Source: https://www.justice.gov/usao-ndny/pr/owner-malta-s-ellsworth-commons-agrees-pay-805000-and-permanent-exclusion-federal