14 charged in mortgage scheme

The owner of an Oceanside-based mortgage firm was among 14 people arrested last week and charged with operating a mortgage fraud scheme involving more than 100 mortgage loans worth more than $58 million.

According to an indictment filed by the U.S. attorney for the Southern District of New York and the New York office of the FBI, the defendants took part in the scheme between 2004 and 2009 while employed by the mortgage brokerage firm First Class Equities, which has offices in Oceanside and Westbury.

Among the indicted were Gerard Canino, 50, owner and president of First Class Equities and a Merrick resident, and Michael Raphan, 63, of Oceanside.

The indictment alleges that the defendants deceived homeowners, banks and lenders by falsifying personal and financial information and other legal documents to obtain mortgage loans, and then kept the proceeds. If convicted, many of them face up to 30 years in prison and fines of up to $1 million. Canino may face up to 90 years in prison and a $3 million fine.

“As alleged, this brazen and wide-ranging scheme defrauded banks and lenders of millions and enriched its participants, including real estate professionals who took advantage of their inside knowledge of the system to fleece it,” Preet Bharara, the U.S. attorney for the Southern District of New York, said in a written statement.

According to Bharara, the defendants targeted homes whose owners were in financial distress and were having trouble making mortgage payments. The defendants allegedly arranged home sales between the homeowners and “straw buyers” — people who posed as home buyers but had no intention of paying for, or living in, the mortgage properties, and who often relinquished their control over the properties to the defendants after the closing of the properties. One straw buyer allegedly purchased 10 mortgages on properties through First Class Equities within a short time in 2006, and received $300,000 in fraud proceeds as payment.