U.S. News

Mother and son plead guilty in NY mortgage fraud

NEW YORK (Reuters) - The mother and son operators of a New York mortgage brokerage firm and one of their employees pleaded guilty on Friday to taking part in a multimillion dollar subprime mortgage scheme.

Twenty-seven people were charged in U.S. District Court in Manhattan with involvement in the scheme to defraud subprime banks and lending institutions from 2004 through January 2007 by the firm, AGA Capital NY Inc.

The indictments were unsealed last year before the full impact was known of the easy credit and “no document” loans at the heart of the U.S. mortgage crisis. Thousands of Americans with weak credit who obtained so-called subprime mortgages have defaulted on their loans and lost their homes.

“The defendants committed the fraud by submitting loan applications and supporting documents, which contained false information and omissions, to subprime lenders in order to induce the lenders to make loans that otherwise would not have been funded,” according to the indictment.

Garri Zhigun, 31, his mother Galina Zhigun, 54, and Maryann Furman, 30, pleaded guilty to bank fraud or wire fraud in court on Friday. They all face a maximum of 30 years in prison when they are sentenced next year.

Garri Zhigun agreed as part of his plea to forfeit $2.5 million and the other two agreed to forfeit $1 million each.

The U.S. Attorney for the Southern District of New York said in a news release that, during the course of the fraud, AGA Capital earned several million dollars in commission fees for brokering hundreds of home mortgages and home equity loans worth a total of $200 million.

Of the 27 charged, 11 have pleaded guilty, 15 are scheduled to go to trial and one is a fugitive.

Reporting by Grant McCool; Editing by Andre Grenon