A former Maryland man pleaded guilty yesterday to federal fraud charges, admitting that his property flipping scheme defrauded lenders out of as much as $2.5 million.
Glenn Rosofsky, 36, was the third defendant to admit in U.S. District Court his role in a scheme where more than 100 low-cost houses were bought and quickly resold at inflated prices. A fourth defendant, Henry Kimball, is expected to plead guilty next week.
Rosofsky, who now lives in Encinitas, Calif., pleaded guilty to two counts of mail fraud. Asked about his employment, he told U.S. District Judge Marvin J. Garbis, "Recently, the mortgage business, doing refinances."
Kimball and Rosofsky, who had been in the telemarketing business together in the early 1990s, launched their property flipping business in late 1998, buying and reselling houses in Baltimore, said a statement of facts written by assistant U.S/ Attorney Dale P. Kelberman. They hired their two co-defendants, Darnell Acree and Bryan P. Rosenberg, who have pleaded guilty, to help them.
Rosofsky and Kimball used newspaper ads to attract prospective investors who agreed to buy packages of rental houses, the statement of facts said.
The buyers were told they would have to put no cash into the deals, that they would get cash back at settlement, that the houses were rented and that the income would cover their expenses, the statement said.
It said Rosofsky and his co-defendants paid $15,000 to $20,000 for each property and sold them quickly for $45,000 to $60,000. They used falsified and fraudulent documents, including inflated appraisals and phony second mortgages, to get first mortgages for their buyers, the statement said, adding that the loans exceeded by $1.5 million to $2.5 million the value of the houses that were being financed.
Sometimes, the defendants temporarily deposited funds in the buyers' bank accounts to give the lenders a false impression that they had funds for the purchases and were putting their own money at risk, the statement said. The funds were returned to Rosofsky and his co-defendants after settlement.
Twice, Rosofsky temporarily deposited $15,000 in the bank account of a Virginia financial analyst to make it appear that he had sufficient funds for settlement, the statement said. The man ended up buying nine Baltimore houses between September and December 1999, getting back between $2,000 and $5,000 at each settlement. He has lost most of them to foreclosure, records show.
Garbis scheduled sentencing for April 10. Under federal guidelines, the judge said, Rosofsky could receive a prison sentence of between 30 months and 37 months.