Published on:

Plaintiff Alleges Bank Fraud Scheme


The savings bank filed a motion for summary judgment in its action against the mortgage corporation and the guarantors for breaches of loan agreement and guaranty agreement, respectively, by the latter and for their charges against another defendant for the commission of bank fraud.

The plaintiff entered into a contract of loan at New Jersey with the mortgage banker wherein the savings bank extended a line of credit to the defendant for the purpose of closing the latter’s existing mortgage loans. In connection with the loan agreement, the officers, who are the owners of the mortgage corporation, executed individual guaranty contract which established their solidary liability of the mortgage banker’s obligation upon its failure to settle the obligations on time. A New York Criminal Lawyer said another guaranty was executed by the owner’s wife in relation with the loan agreement.

The stipulations of the loan agreement pertain to the grant of mortgage loans of the defendants’ borrowers where the line of credit shall be used to finance the mortgage contracts. Upon settlement of the mortgage loans by the borrowers, the proceeds of the loan would then be remitted to the savings bank and mortgage notes would be used as security in favor of the savings bank as part of their agreement. A Staten Island Criminal Lawyer said such mortgages would then be sold to potential investors and the plaintiff, as bailee, shall give the investors the mortgage notes where they shall pay the purchase price directly to the savings bank’s mortgage warehouse lenders who in turn would give the proceeds back to the savings bank as payment to the advances made by the defendants in their line of credit with the plaintiff. The defendants were responsible to the keeping of all the records pertaining to the loan agreement.

With the advice of a government housing agency, the plaintiff terminate the defendants’ line of credit with them because of the alleged commission of fraud and misrepresentation by herein defendants against the agency. Subsequently, the savings bank made a demand against the defendants for the full and immediate settlement of their outstanding balance in their credit line. The defendants failed to pay the existing obligations, thus, the charges were filed against them.

It was later on discovered the several owners and officers of the mortgage corporation were fraudulently engaged in a “rolling kite” scheme wherein they knowingly submit to the plaintiff fraudulently pay-off information, which led to the misapplication of payments made by the investors.

The defendants duly admitted the claims of the plaintiff for their default to pay the existing obligations of the line of credit extended to them by the savings bank in connection with the loan agreement. The individual guarantors also did not deny the execution of their guaranty contracts with the savings bank. The defendants also admitted their engagement in the “rolling kite” (bank fraud) scheme with complete awareness of the misrepresentations they made with investors as to where their payments be applied to settle their purchase mortgage notes. Additional depositions from employees of the mortgage banker were taken to prove the occurrence and practice of bank fraud in which the defendant engaged in paying the oldest existing loans and not the related mortgage notes purchased by the investor itself. The foregoing circumstances clearly established the plaintiff’s claim to file a motion for summary judgment in its favor.

In accordance to the enforcement of the loan contract executed by the parties, the Court granted the motion for summary judgment in favor of the savings bank’s cause of action against defendants as to liability. The plaintiff’s second motion for summary judgment alleging the commission of bank fraud against another defendant was also granted as to liability. As to determination and assessment of the amount of actual damages to be given to the plaintiff, further proceedings shall be conducted.

Stephen Bilkis and Associates, through their lawyers, regularly engaged in assisting and mediating execution of contracts or agreements between and among parties or entities to protect the interests of each party. Frauds and breaches of contracts are considered common scenarios during its implementation or existence, as such, it is necessary for one to acquire assistance of bank fraud attorneys to avoid these unwanted situations. Whether you have been charged with theft, sex crimes, or drug possession, we can help.

Contact Information