Home Start America, Inc. (“HSA”) was owned and run by Reading, Pennsylvania citizen MICHAEL KAUFMANN. HSA represented itself as a real estate investment and development firm having branches in Allentown, Pennsylvania, and Bloomfield, New Jersey. On behalf of HSA, the defendant MICHAEL KAUFMAN, among other things, bought and sold residential investment properties. Additionally, the defendant MICHAEL KAUFMAN solicited customers to acquire houses from HSA as well as other residential properties that were on the market.
Home-Start America’s CEO was given a 50-month prison term for his involvement in a $1.5 million fraud conspiracy.
According to U.S. Attorney Paul J. Fishman, Michael Kaufmann, the CEO and founder of alleged real estate investment company Home Start America, Inc. (“HSA”), was sentenced today to 50 months in prison for his part in a long-running, extensive wire fraud conspiracy with loan officer David Wynn.
On April 11, 2011, Michael Kaufmann, 43, of Reading, Pennsylvania, entered a guilty plea to a Superseding Indictment that accused him of conspiring to commit wire fraud. Before U.S. District Judge Dennis M. Cavanaugh, who also handed down the sentence today in federal court in Newark, Michael Kaufmann entered a guilty plea. Michael Kaufmann was also mandated to pay $1,336,399 in reparation by Judge Cavanaugh.
According to court testimony and evidence submitted in this case:
HSA was started by Michael Kaufmann in Bloomfield, New Jersey, and at one point employed over 30 employees. Through HSA, Michael Kaufmann bought and sold residential real estate. With the promise of no money down, no closing costs, and repairs covered by HSA, Michael Kaufmann and others persuaded people—often first-time homebuyers—to acquire residences rapidly as part of the plan. The buyers would then be directed by Michael Kaufmann to loan officials like Wynn, 45, of Englewood, New Jersey.
Many of the homes that HSA sold were ones that it had just purchased and “flipped” to unwary buyers for much more money than it had originally paid. To falsely represent that the buyers could afford the properties HSA was selling, Michael Kaufmann, Wynn, and others overstated the customers’ income and assets on loan paperwork. However, the buyers lacked the funds to pay for the properties.
Victim financial institutions issued the mortgage loans without knowing the purchasers’ actual financial situations, relying on the bogus data in the loan documents. Wynn and other loan officers received commissions for their unlawful activity, and HSA and Michael Kaufmann collected illegal gains when the deals concluded. After the closings, the buyers were unable to continue making their mortgage payments and almost always had to lose the residences to foreclosure.
Over $1.5 million in losses were incurred by the banks as a result of the scam, which started in 2002 and continued until June 2005, while Michael Kaufmann and HSA made hundreds of thousands of dollars in profits.
Judge Cavanaugh also imposed a restitution order and three years of supervised release on Michael Kaufmann.
For his part in the plot, Wynn was given a year and a day in jail on October 17, 2011. In addition, Judge Cavanaugh gave him three years of supervised release and a $171,000 restitution mandate.
The Office of Inspector General of the Department of Housing and Urban Development, led by Joseph W. Clarke, Special Agent in Charge for the Mid-Atlantic Region, and the FBI, led by Special Agent in Charge Michael B. Ward, were praised by U.S. Attorney Fishman for their work on the investigation that resulted in today’s sentence.
Assistant U.S. Attorneys Bohdan Vitvitsky and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark are on the government’s side.
When Michael Kaufmann was given a sentence for bank and loan fraud.
Michael Kaufmann, of Pittsford, New York, was found guilty by a federal jury of conspiring to commit bank and loan fraud as well as bank and loan fraud. Today, U.S. District Judge Frank P. Geraci sentenced him to one year in prison and ordered him to pay $1,360,893.72 in restitution, according to U.S. Attorney William J. Hochul, Jr.
Between 2002 and June 2008, the defendant and his son Richard Kaufman instructed the Controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank and the company’s outside accounting firm, according to Assistant U.S. Attorneys Craig R. Gestring and Bradley E. Tyler, who handled the case’s trial.
The two assets that Key Bank used as collateral for a $2,000,000 loan credit were accounts receivable and inventory, both of which were grossly overvalued by the misleading financial statements.
The defendants utilized the loan proceeds to support their luxurious personal lifestyles, which included pricey residences, high incomes, and country club memberships. In the summer of 2007, when the defendants were in default on the Key Bank loan, they converted around $53,000 in accounts receivable revenues that belonged to Key Bank for their use. The fraud operation cost Key Bank an instant loss of more than $1.5 million.
Additionally found guilty at trial and given a 46-month prison term was Richard Kaufman.
The investigation was conducted by Special Agents of the Federal Bureau of Investigation and Postal Inspectors from the United States Postal Inspection Service under the supervision of Shelly A. Binkowski, Postal Inspector in Charge, Boston Division. The investigation’s findings were presented at the sentencing.
