Man admits role in flipping scheme

He pleads guilty, says he plans to enter the mortgage business

January 07, 2003|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A Lutherville man admitted in federal court yesterday his role in a scheme that bilked mortgage lenders of as much as $2.5 million, then acknowledged through his attorney that he is planning to go into the mortgage business.

Bryan P. Rosenberg pleaded guilty in U.S. District Court to two mail-fraud counts, admitting that he was involved in a property-flipping scheme in which more than 100 low-cost houses were bought and quickly resold at inflated prices to aspiring investor-landlords.

Falsified and fraudulent documents were used to obtain mortgages for the buyers that exceeded by $1.5 million to $2.5 million the value of the houses that were being financed, Assistant U.S. Attorney Dale P. Kelberman said in a statement of facts.

Rosenberg and his co-defendants generally paid $15,000 to $20,000 for the houses and sold them quickly for $45,000 to $60,000. Kelberman said the buyers put no money into the transactions and received cash back at settlement.

Minutes after the guilty plea, Kelberman told U.S. District Judge Marvin J. Garbis that Rosenberg had "indicated" that he is going into the mortgage business, "the same business that brings him here."

The disclosure prompted a strong response from the state agency that licenses lenders.

"We will object in the strongest terms to his affiliation with any mortgage lender in Maryland," Nerry L. Mitchell, the state's deputy commissioner of financial regulation, said later.

Kelberman asked the judge to bar Rosenberg from the mortgage business "at least until sentencing" on April 8. Garbis refused. He allowed Rosenberg to remain free pending sentencing but required him to answer any questions from prosecutors or court personnel about his work.

Rosenberg, 39, did not speak to Garbis about his plans and refused to discuss them with a reporter after the hearing.

His attorney, Flynn Owens, told Garbis that Rosenberg was "adamant" that he would "not be engaging in any unlawful activities." He said his client was "especially cognizant of how unwise that would be in light of this matter."

After the hearing, Owens was asked to comment on the possibility that a client who had just admitted defrauding lenders with falsified documents would be in a business that processes applications and other loan documents and grants mortgages.

"It's apples and oranges," Owens said. "Because he had involvement in the past doesn't mean per se that there will be unlawful activity in the future. I'm confident there won't be."

Mitchell said his agency had not received an application from Rosenberg for a license as the principal of a lending firm. But based on information from federal law enforcement agents, he said, Rosenberg might plan to work for a New York firm that is acquiring another lender's business in Maryland and has a license application pending.

The state has no authority to bar a person from the mortgage business, Mitchell said, but it can express strong objections. He suggested it might deny a license application if a company hired a person who had pleaded guilty to mortgage fraud.

Carolyn Branton of Washington welcomed Rosenberg's guilty plea. Branton said she and her husband purchased 14 houses from Rosenberg and his co-defendants in 2001 for more than $500,000 and took on $6,500 in monthly mortgage payments.

"I'm so relieved," she said. " They could have found other ways to make money than to con people like this. They were good at what they did."

Branton said she and her husband are struggling to maintain the properties for tenants and keep up their payments.

One of Rosenberg's co-defendants, Darnell Acree, pleaded guilty last month. Two others, Henry Kimball and Glenn Rosofsky, are expected to enter guilty pleas in the next month, prosecutors said.

Rosenberg could receive a maximum sentence of five years in prison and a $250,000 fine on each count. Under federal guidelines, his sentence is expected to be less.

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