A New York man has pleaded guilty to charges stemming from his role in a mortgage fraud scheme involving several multifamily housing properties in Hartford. According to a press release from the U.S. District Attorney’s office, Jacob Deutsch, in concert with his cousin Aron, defrauded several financial institutions to the tune of nearly $50 million. 

Jacob Deutsch, who ran day-to-day operations for B H Property Management LLC (BHPM) based in Hartford, provided false rent rolls and falsified leases, overstating how many renters they had and how much they paid in rent, to mislead financial institutions and their appraisers. Deutsch would stage apartments and have BHPM employees represent themselves as residents to fool inspectors. 

Deutsch provided false information to financial institutions like government-sponsored enterprises Federal Home Loan Mortgage Company (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”), and the U.S. Department of Housing and Urban Development (HUD). The false information was used to secure loans that they would not have otherwise been issued on the terms requested, or for larger amounts than if they would have provided accurate information.

In one instance of fraud, Deutsch told CBRE Capital Markets (CBRE) that 16 Evergreen Avenue, a 26-unit apartment building in Hartford, was 100 percent occupied when it was actually completely empty. Deutsch then emailed CBRE checks on money orders purporting to be rent payments from the fake tenets to show proof of payment, but the checks and money orders had been purchased by Aron Deutsch or BHPM employees at Aron’s behest.

Deutsch also provided financial institutions with false and inflated income statements and financials for the properties, doctored bank statements, doctored or false documents overstating the purchase price of various multifamily housing properties, and doctored checks and invoices showing false or overstated capital improvements made to the properties. 

Both Jacob and Aron Deutsch were arrested in May of last year. On Tuesday, Jacob Deutsch pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud affecting a financial institution. Aron Deutsch plead guilty to the same charge at the beginning of June. Both men face a possible 30 years in prison and are out on bond pending sentencing, with Aron scheduled to be sentenced on November 3rd.

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Tom Hopkins wrote for CII from April 2022 to February 2023. Prior to joining CII, he worked in print, television, and as a freelance journalist.

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