Iskyo Aronov, Conspiracy to Commit Wire Fraud and Bank Fraud, New York 2024

Mortgage Fraud Scheme Unfolds in Brooklyn

Five defendants, including Iskyo Aronov, Michael Konstantinovskiy, Tomer Dafna, Avraham Tarshish, and Michael Herskowitz, have been charged with conspiracy to commit wire fraud and bank fraud in connection with a mortgage fraud scheme that defrauded mortgage lenders, including the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

According to the indictment, between December 2012 and January 2019, the defendants conspired to defraud mortgage lenders, misleading them into approving short sale transactions at fraudulently depressed prices. In a short sale, with the approval of the mortgage lender or servicer, a mortgage loan borrower sells his or her property for less than the outstanding balance of the mortgage loan.

The defendants fraudulently manipulated the short sale process by transferring properties for prices well above the short sale prices, and failing to disclose this to the mortgage lenders and servicers. They also took steps to preclude other prospective purchasers from making higher offers for properties by failing to market properties as required by the lenders, and by filing fraudulent liens on properties.

As a further part of the scheme, the defendants provided the mortgage lenders and servicers with false and misleading information in transaction documents and failed to disclose either payments made to the borrower and others related to short sale or contemporaneous agreements to transfer the properties at inflated prices.

“As alleged, the defendants defrauded mortgage loan holders out of millions of dollars, with taxpayers saddled with much of the loss,” stated United States Attorney Richard P. Donoghue. “This Office will continue working with our law enforcement partners to vigorously prosecute those who commit mortgage fraud and enrich themselves at the expense of the financial institutions and government programs that insure or guarantee the loans.”

The defendants were arrested on July 26, 2024, and will be arraigned before United States Magistrate Judge Lois Bloom. The case is being investigated by the Federal Housing Finance Agency, Office of the Inspector General, Northeast Region, and the U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Region.

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