nothin Kwame & Straw Buyer Leave Trail Of Blight | New Haven Independent

Kwame & Straw Buyer Leave Trail Of Blight

Paul Bass Photo

A house stood on this Lilac Street lot until alleged scammers milked it and the city condemned it.

A New Haven man living in public-housing projects managed to cough up more than $1 million to buy properties around town.

And an African liberation leader returned from the grave to run a mortgage scam that sowed neglect in struggling New Haven neighborhoods.

If you think that sounds preposterous, you’re not alone — federal investigators thought so, too.

They probed purchases of rundown homes in Fair Haven, Newhallville and the Hill that involved a network of alleged co-conspirators, including a West Rock housing tenant and an investor calling himself Kwame Nkrumah. The feds say the network set up sham purchases in order to bilk lenders out of more than $1 million, while in some cases leaving properties to rot.

The alleged details of that scam appear in a superseding” grand jury indictment newly released by the Connecticut U.S. Attorney’s office.

It involves hundreds of thousands of dollars of alleged sham purchases of seven properties on Lilac Street in Newhallville, Lloyd and James streets in Fair Haven, Howard and Greenwich avenues in the Hill, and Elm Street in Dwight/Kensington.

Besides shedding light on an alleged mortgage swindle that stiffed lenders (including the federal government), the transactions and their trail reveal how real estate-fraud can contribute to neighborhood decline amid a foreclosure crisis.

The superseding indictment (read it here) builds on an earlier indictment, released last October, which began to lay out evidence amassed against an alleged ringleader of the network, Ronald E. Hutchison, Jr. (Read about that here.) That document in turn mirrored the allegations against a separate network of prominent people who ravaged New Haven neighborhoods through mortgage fraud, allegations that led to a slew of convictions. (Read about that here, here, here, and here.)

In both networks, the feds described a similar scam. The grand jury described its purpose this way: to unlawfully enrich themselves by obtaining millions of dollars in residential real estate loans through the use of, among other things, materially false loan applications, two HUD‑I [federal Department of Housing & Urban Development] forms, secret contract addenda, false down payments, and fictitious leases, and to conceal the conspiracy from others.”

Here’s how the feds say the scam works:

The scammers buy a rundown, often abandoned, New Haven property for cheap. The scammers pretend to sell the property for up to 10 times the price to a new buyer.” But the scammers are just pretending to make the sale. They’re keeping the property themselves without having much if any real money change hands. The scammers find a low-income person (a straw buyer”) willing to pretend in legal documents to be purchasing the property. Then the scammers get six-figure mortgages in the name of the straw buyer based on the phony sale price. In return, the straw buyer gets a bag of cash ($10,000 in the already litigated case). The scammers sometimes enlist others — lawyers, appraisers — to prepare phony documents pretending the straw buyer has a job to support paying back the mortgage, and alleging a $20,000 property, say, is worth $150,000. Then the scammers pocket the mortgage money. They collect rents on the properties while letting them continue to slide. Eventually lenders foreclose on the properties, the scammers walk away, and a new wave of slumlord/outside investors often moves in.

The Unnamed

Paul Bass File Photo

The most striking names in the new superseding indictment are either pseudonymic or invisible as the feds continue their investigation into the alleged scam ring.

Joseph Levitin (pictured) is invisible, for instance.

Back in 2010 the New Haven poverty landlord’s name did appear in a federal document announcing his arrest for alleged central role in one of these mortgage fraud rings. Since then, the feds arrested Hutchison and others for allegedly participating in that ring and doing deals that involved Levitin. Levitin clearly continues to play a central role in that investigation.

Yet his name appears nowhere in the new superseding indictment. It appeared nowhere in the previous version.

The indictment does refer to others, both known and unknown to the Grand Jury,” who allegedly helped carry out the scam.

He’s been arrested and been required to post bond. It is inevitable that he will be formally charged,” Levitin’s attorney, Willie Dow, said this week. It does my client no good to discuss this on the front page of the New Haven Independent.”

Kwame Nkrumah’s name appears in the superseding indictment as a co-conspirator of Ronald Hutchison in arranging phony sales to rip off lenders.

Kwame Nkrumah is the name of the man who helped liberate Ghana from British rule in 1957. Nkrumah died in 1972.

Kwame Nkrumah is the not-real name of the man who allegedly ran the New Haven scam ring with Ronald Hutchison, according to the federal grand jury’s superseding indictment. The man’s real name, it says, is Roger Woodson. The same Roger Woodson who was getting in trouble for his handling of New Haven slum property as far back as 20 years ago, when he was convicted of two charges of first-degree arson for torching a Lamberton Street property in 1989 in order to cash in on a fire insurance policy.

In recent years Woodson has had run-ins with city housing inspectors. They knew him as Kwame, too.

In the superseding indictment, the grand jury now charges Woodson and a colleague with five counts in all of conspiracy, mail fraud, and wire fraud.

Woodson pleaded not guilty to those charges last week. He’s now in prison awaiting trial.

It’s a little too early to comment” on the charges before the government comes forward with some its evidence, Woodson’s attorney, Frank Riccio Jr., said this week.

He informed me,” Riccio said, that he had legally changed his name to Kwame Nkrumah.”

Straw Buyer?

The most intriguing figure in this case may turn out to be the alleged straw buyer. (In the first mortgage scam team prosecution, the straw buyer told a tale worthy of a silver-screen thriller: read about it here.)

The superseding indictment refers to the alleged straw buyer only as Individual #1.”

Individual #1, it states, pretended to buy 451 Howard Ave. in 2006. Then he signed a doctored application for a mortgage from First Bank. The application included a phony verification form claiming that Individual #1 worked at an outfit called All World Realty. The loan also falsely stated that Individual #1 would live on the premises.

Individual #1 also pretended to purchase 73 – 75 Lilac St. in January of 2007, according to the indictment. And he obtained a mortgage from America’s Wholesale Lender with the same allegedly false employment info and false promise to live on the premises.

Individual #1 further made a similar purchase” the same month, of 311 Greenwich Ave., in alleged cahoots with the scammers. Same alleged fake employment claim. Same alleged phony promise to live in the house.

City land records reveal the name of Individual #1: The sales and mortgage deeds list him as one Robert L. Morgan.

Rather than living at all those three addresses at once, he was instead living in the Abraham Ribicoff public-housing cottages on Brookside Avenue, according to the address listed in those records. That’s where eventual foreclosure papers kept getting delivered.

The land records show Morgan supposedly purchased rundown 73 – 75 Lilac for a whopping $265,000 — even though it had sold for just $140,000 only two years earlier (The previous owners claimed to have put $30,000 into it.) Then Morgan (or his alleged scammer sponsors) collected $251,750 from First Bank.

The records show Morgan supposedly bought 311 Greenwich for $230,000, almost twice its previous sales price four years earlier. He bought 451 Howard for $290,000, then collected almost as much in mortgages.

Morgan also purportedly found over half-million dollars more to buy” at least two other properties in town not mentioned in the superseding indictment, according to land records: 418 – 20 Shelton Ave., for $290,000; and 127 Clay St., for $250,000. (The closing attorney on that transaction was one Morris Olmer, who has since been sentenced to five years in prison for his role in the other set of scammers the feds prosecuted.)

When lenders started foreclosing on his alleged properties, Morgan failed to show up in court to contest the proceedings, according to court files.

Robert Morgan no longer lives in the Ribicoff complex. (The aunt of a woman living there in 2009 said they’d never heard of him.) The Independent this week tracked him down at a modest apartment building elsewhere in town.

He refused to open his apartment door.

I’ve already had home invaders,” he said, his voice shaking. Go away.”

Asked about the home purchases, he replied, Leave it alone.” Then he peered through his curtains to watch a reporter leave the premises.

He and the alleged scam masterminds have long lost control of the houses they bought or bought.” Banks have either foreclosed on them, begun foreclosing on them, or found new buyers, not all of them an improvement.

Left With The Detritus

LCI Photo

The stairs at 186 James.

As the feds proceed with the plodding pace of prosecuting the scam case, New Haven’s neighborhoods are left with dealing with long-neglected properties in the heart of foreclosure-ravaged neighborhoods.

Not all the episodes had unhappy endings. A successful not-for-profit developer, Neighborhood Housing Services, ended up buying one of the Nkrumah/Morgan properties, at 311 Greenwich. (Sales price: $27,000.) Lisa Delvalle, whose parents and sister live in a former Woodson/Hutchison house at 115 Lloyd St., report that the new landlord there, John D. Hall, has kept apartments in good condition and responded promptly to maintenance problems.

More typical has been the fate of properties like crumbling 149 Lloyd.

Or 186 James. City government inspector Rafael Ramos forced the new landlord there to move tenants to the first floor after the building department condemned a dangerous makeshift stairway (pictured above) constructed without a permit to connect to an illegal third-floor apartment.

The Howard Avenue house ended up in Michael Steinbach’s hands. Read about him here, here, here, and here.)

The most vivid example of costly lost opportunity may be 73 – 75 Lilac.

After a history of neglect by outside owners, then periodic repairs, the building fell apart after the alleged scammers left the neighborhood. Owner” Morgan or whoever else was watching the property left it boarded up and vacant; a succession of neglectful owners had left it empty and boarded up from time to time as far back as 1984, according to city records.

A suspicious” fire wrecked the building in 2009. (The house had no working utilities at the time.) It remained vacant and vulnerable. The city’s building department finally declared it unsafe and ordered it demolished on March 2011. It is an empty lot today (pictured at the top of the story).

New Haven taxpayers paid $37,000 to have the problem property demolished. To date no one has paid the city back.

The city did put a lien on the property. The entity responsible for the property, Bank of America, didn’t pay the $37,000. It doesn’t technically have to. It took over the mortgage, but not ownership of the property.

We’ll get the money from the lender when the property sells,” said Frank D’Amore, deputy director for property services at New Haven’s Livable City Initiative (LCI).

The city did send a bill to the man listed as still owning the property, to no avail. The man’s name? Robert L. Morgan.



Independent coverage of the first mortgage-fraud conspiracy case:

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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