CAMDEN, N.J. – A property manager was sentenced today to 15 months in prison for his role in a scheme to defraud financial institutions as part of a multimillion-dollar mortgage fraud that used phony documents and “straw buyers” to make illegal profits on over-developed condominiums in the Wildwood, New Jersey, area, U.S. Attorney Paul J. Fishman announced.
Paul Watterson, 55, of Mountainside, New Jersey, previously pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Judge Simandle imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Watterson and his conspirators identified homes in Wildwood and Wildwood Crest and recruited straw buyers to purchase those properties at the inflated rates. The straw buyers had good credit scores, but lacked the financial resources to qualify for mortgage loans. Watterson created fraudulent loan applications that contained false information about the straw buyers’ employment, income, assets and intended use of the properties. Watterson also obtained on behalf of his conspirators false documents to support the phony loan applications for certain straw purchasers. Watterson’s actions were designed to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.
Watterson and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Watterson’s conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to other members of the conspiracy for their respective roles. Watterson received $273,600 from five separate real estate transactions.
In addition to the prison term, Judge Simandle sentenced Watterson to three years of supervised release.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; and IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, for the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorney Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel: Thomas R. Ashley Esq., Newark