CLEVELAND – County prosecutors exposed what they claim to be the nation’s largest mortgage fraud case, involving over 500 real estate transactions and fraudulent loans of $44 million.
Uri Gofman, 39, a Beachwood resident accused of being the mastermind behind the scheme, pled guilty to fraudulent mortgages that resulted in $31 million in profits. Gofman admitted to engaging in corrupt activities, theft, and money laundering.
In a typical transaction, Gofman recruited straw buyers from among his family members, friends, and others, to buy homes. He then falsely stated that improvements were made to those homes, and refinanced them for amounts in excess of their value. Gofman then sold the homes to unqualified buyers, using help from real estate professionals, mortgage brokers, and title companies.
Of the 453 houses Gofman flipped through his fraudulent methods, 358 ended into foreclosure. Cleveland, an epicenter of the subprime loan crisis, had some of the highest foreclosure rates in the nation. The banks that loaned money for the transactions he orchestrated were stuck with millions of dollars in losses, and properties they could not sell.
Ten other accomplices of Gofman were were indicted on mortgage fraud-related offenses: Tony Viola, Igor Gofman, Kevin Landrum, Dave Pirichy, Dale Adams, Steve Greenwald, George Gardner, James Leoni, along with Real Asset Fund owned by Uri Gofman and Karka Inc., which is also owned by Uri Gofman. Some 34 other defendants were indicted on mortgage fraud-related offenses.
In the Cuyahoga County alone, over 280 defendants have been indicted since 2007 for over $110 million in fraudulent mortgage loans for 812 houses. Of those 812 houses, 616 eventually fell into foreclosure.