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Facing 30 Years, Scammer Turns Star Witness

by Paul Bass | Apr 4, 2014 5:30 pm

(2) Comments | Commenting has been closed | E-mail the Author

Posted to: Housing, Legal Writes, Fair Haven, Newhallville, The Hill

Paul Bass Photo Zonah means “prostitute” in Hebrew. It accrued a second meaning in New Haven poverty real-estate scamming: “Name of fictional tenant on a fake lease created to fool the bank.”

A federal jury learned both meanings of the word Thursday in U.S. District Judge Janet Hall’s courtroom on Church Street. (More about that at the end of this story.)

A one-time high-flying young megalandlord named Joseph Menachem “Yossi” Levitin taught the jurors the two definitions. From the witness stand.

He taught them a lot Thursday, about how everyone from real-estate brokers to attorneys to “straw buyers” to out-of-state investors broke laws to steal millions of dollars by conducting sham transactions on crumbling homes in struggling New Haven neighborhoods like Newhallville, Fair Haven, and the Hill. They grabbed the money and let the properties rot—until the FBI grabbed them.

Levitin was the big fish out of the cast of characters arrested in the federal crackdown on two sprawling mortgage-fraud rings. On Thursday, four years after his arrest, the fish started singing.

Levitin, who is 28 years old, faces up to 30 years in prison and $20 million in fines for helping arrange to bilk lenders out of $10 million while leaving a trail of rundown New Haven properties. Rather than risk serving all that time, he pleaded guilty and started cooperating with the federal prosecutors. At the time of his 2010 arrest, the government moved to take control of 51 of his properties that he had bought with illicit proceeds from the sale of 40 other properties; since then he has been free to manage and buy or arrange the sale of dozens of new properties as he awaits sentencing.

Paul Bass Photo Thomas MacMillan Photo Just the threat of his testifying in court may have helped the feds obtain guilty pleas from an assortment of big, medium and bit players in the conspiracy. But two mid-level alleged players—a late-night infomercial-watching Westchester corrections officer named Jacques Kelly (pictured above outside court Thursday) who dreamed of getting rich quick in real estate; and an aggressive mortgage officer named Andrew Constantinou (at left)—have pleaded not guilty. Their trial began this week in Judge Hall’s New Haven courtroom.

Most of the day Thursday, Levitin detailed in a soft-spoken monotone the nitty-gritty details of how he pocketed up to a half-million dollars in broker’s fees on more than 40 illicit property sales and his accomplices allegedly stole millions more through sham deals.

A government lawyer who would have prosecuted Levitin, Assistant U.S. Attorney David T. Huang, instead coached him and walked him through the confession of his crimes as a partner in prosecution. Technically, Levitin was there to help the government obtain a guilty verdict against Kelly and Constantinou in return for lesser jail time. And he did provide testimony, all morning and afternoon, alleging that the pair actively and knowingly took part in sham deals. In practice, Levitin testified against Levitin, documenting step by step how at an age when other people are trying to figure out what to do with their lives he became one of the New Haven’s biggest slumlords, and real-estate crooks.

He ran down what Huang repeatedly referred to as “The Scheme.”

“We would take a property and make a contract for an inflated amount on top of what someone was really going to pay,” Levitin testified. “So the bank would loan more money.”

Paul Bass File Photo The son of a New Haven rabbi, Levitin described in the stand growing up one of 10 siblings, obtaining his GED at age 17, taking some courses at a rabbinical college and at Gateway Community College. But rather than seek a diploma, he made New Haven real estate his classroom. He earned a real-estate license and formed both an agency, Prestige Realty, and a property management company, Levitin Management LLC, the latter before he was legally old enough to buy liquor.

A year into that business, in 2006, one of his agents introduced him to Jacques Kelly, the corrections guard investing in real estate on the side. He arranged at least 16 sales in 2006 and 2007 for Kelly and for a fellow corrections officer named Ronald Hutchison.

At first, Levitin said, they performed a simple version of the scam. They signed an official contract for one price for the properties. They used that price to obtain a mortgage. Then they signed an “addendum,” separate documents that had a smaller price to which both sides had agreed. That way, the buyer wouldn’t have to pay any money for a downpayment or closing costs. Mortgage companies grant mortgages covering 85 or 90 percent of a sales price, say, assuming that the buyer will pay the rest in the form of a downpayment. In these cases, the buyer got 100 percent of the money in the form of a mortgage and used that to cover closing costs and the downpayment, according to the government and several people who have pleaded guilty.

So in buying, say, 517 Winchester Ave., a three-family house in Newhallville , the official contract showed a $310,00 purchase price. The addendum showed an actual price of $279,000. In land records and as far as the mortgage company knew,  289 Division St. and 21-23 Sheffield Ave. sold for $270,000 apiece. The true price was $243,000, according to the “addenda” signed by both parties, and displayed on computer screens in Hall’s courtroom Thursday. (As with so many of these properties, the alleged scam buyers never put any of the mortgage money into the properties. Instead they defaulted on the mortgages.)

Huang asked if the seller minded going along with two sets of transactions, one of them fake.

“The seller really wanted to sell the property. He didn’t really care how the buyer got his financing, as long as he got the price he wanted,” Levitin replied.

Thomas MacMillan File Photo Similar transactions took place at 14016 Bassett St. and 261 West Ivy in Newhallville, 270 Davenport Ave. and 125 Spring St. in the Hill, 436-8 Poplar and 147 Lloyd St. (read a story about that property here) in Fair Haven, to cite just some examples that Huang and Levitin spent hours methodically detailing through in court. Levitin stared straight at Huang as he spoke, not at the two accused parties sitting in leather armchairs at the juncture of two defense tables to his right in the opposite corner of the room. He turned his gaze at times to the left, to the 12 jurors and four alternates, when Huang instructed, “Can you tell the jury about that.”

The scammers built a 10 percent inflated price into those deals. Then, when another alleged co-conspirator who called himself Kwame Nkrumah (after the late Ghanian liberation leader) entered the operation, they started building in far higher amounts, Levitin testified. Soon they were not only covering closing costs and downpayments, but pocketing as much as $100,000 extra. Meanwhile, they left their properties to atrophy.

He recalled seeing that happen for the first time at a closing for numerous sales in the office of Milford attorney Genevieve Salvatore, who has pleaded guilty in this case.

“She was cool. She was cutting checks,” Levitin said of Salvatore.

“Cool?” asked Huang.

“She was relaxed. ... I’d never seen a buyer [obtain] money” at a closing before, he said. “I knew this wasn’t legal. She was cutting checks and handing them to Mr. Kelly. ...

“It was all done very openly. That’s why it stood out in my mind. To see an attorney openly involved in something like this—even if they knew about it—seemed” odd.

He told stories as well about how he allegedly worked with Constantinou and his hand-picked appraisers to provide false appraisals to the banks in order to obtain the loans. Appraisals rely on comparable sales of properties to determined that a sales price justifies a mortgage. True appraisals obviously wouldn’t work for these deals, since they wouldn’t justify the inflated prices. So they successfully pushed one appraiser, and simply informed a more pliant second appraiser, to come up with phony comparisons, Levitin testified.

Levitin also described how he and Constantinou also allegedly took photos of furnished occupied apartments and pretended they were photos of empty apartments, to include in the loan applications. They “avoid[ed] taking pictures of leaks.”

The banks still balked sometimes. One reason: They needed proof that apartments were being rented, to show that an income stream would enable borrowers to repay mortgages.

So, Levitin said, they invented fake leases. With fake names.

Levitin, meanwhile, pocketed 6 percent fees for his role brokering each transaction, more than 40 of which took place over just two years. He also helped draw up the fake documents to make them happen, he testified.

“I would make a lease to match what was needed,” he said. He said the he or the property owner would sign the names of the fake tenants.

Paul Bass Photo Huang (pictured outside court Thursday) projected six of those fake leases on the screens.

Three of them were leases with fictional names of tenants in three actually empty apartments at 537 East St.

The name of the alleged first floor tenant appeared as Zonah Abernante.

“Is Zonah Abernante a real person?” Huang asked.

“No,” Levitin responded.

“How do you know?”

“The name Zonah means ‘prostitute’ in Hebrew. I believe one of my employees put it in to be funny.”

With many of the leases, Huang demonstrated that the beginning dates were listed as occurring before the owners actually bought the property. So that means, he rhetorically asked Levin, that a simple glance at the document shows that it can’t possibly be genuine, right?

Right, Levitin repeatedly replied.

Huang did not ask this question: If these leases were such obvious shams, why didn’t the lenders notice? Or if the did, why did they still approve the loans?

When they get their chance, perhaps the defense lawyers—one of whom is seeking to put the banks on trial in absentia in this case—will ask that question.


Previous articles about this case and a related New Have mortgage-fraud case:

Scammer, Awaiting Sentence, Rebuilds
Patsies? Or Schemers?
Fraud Defense: Banks Were The Real Crooks
Kwame & Straw Buyer Leave Trail Of Blight
1 Mortgage Fraud Ring Down, Feds Turn To 2nd
“Big Liberal” Gets 5 Years For Ripping Off Poor
White-Collar Criminals Sent To Slammer
Judge Baffled By Two Morris Olmers
Feds Will Retry Avigdor
4 Convicted In Fraud Scam; Mistrial For Rabbi
Jury Can’t Agree In Scam Trial
Avigdor’s Final Plea: Follow The Money
Claire: The Rabbi Is Kosher
Wednesday The Rabbi Took The Stand
Straw Buyer Lured Into A Wild Ride
After Big Fish Plead, Smaller Fry Point Fingers
Slum-Photo Doctor Makes A Call
What Happened At Goodfellas Didn’t Stay At Goodfellas
Fraud Trial Opens With Oz-Like Yarn
“Partying” MySpacer Lined Up Scam Homebuyers
“Straw Buyer” Pleads Guilty
Neighbors, Taxpayers Left With The Tab
FBI Arrests Police Commissioner, Slumlord, Rabbi
One Last Gambit Falls Short
Was He In “Custody”?
Is Slum Landlord Helping The FBI?
Feds Snag Poverty Landlord
Police Commissioner Pleads
Mortgage Fraud Mastermind Gets 10 Years

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posted by: EPDP on April 4, 2014  6:01pm

This young man is quite smart for a guy with a GED and some rabbinical and Gateway classes.  Smart enough to know that testifying for the Feds will score major points at sentencing. Maybe even a walk and a bottle of champagne courtesy of Uncle Sam. Almost as good as wearing a wire and going undercover.  Was this GED man smart enough to fool the Ivy League Yale grad executives who were running the big investment banks on Wall Street at the time?  The very people who created these toxic subprime loans? Or was he just being used by these Yale grads who looked the other way when millions of bogus loan applications landed on their desks?

posted by: NewHavenTaxTooHigh on April 7, 2014  12:30pm

This individual ought to be barred from the New Haven real estate market. I understand that he doesn’t require a license for the type of work he performs. Nevertheless, the US Attorney and the Judge in this case can require as part of any plea deal that he be barred from working (in any capacity) in the New Haven real estate market. To do otherwise would show total disregard for NH residents and taxpayers.

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