The son and nephew of Western New York developer Robert Morgan, as well as two Buffalo-area men, have been charged in what the U.S. Attorney’s office calls a "multi-million dollar mortgage fraud scheme."
U.S. Attorney James Kennedy announced that a federal grand jury has returned a 62-count indictment charging Frank Giacobbe, 43 of East Amherst; Patrick Ogiony, 34 of Buffalo; Kevin Morgan, 42 of Pittsford; and Todd Morgan, 29 of Rochester, with conspiracy to commit wire fraud and bank fraud.
"Each of those individuals are charged with conspiracy to commit wire fraud and bank fraud, as well as with substantive wire fraud and bank fraud violations," said Kennedy during a Wednesday morning news conference in Buffalo.
Federal authorities alleged that between March 2011 and June 2017, the defendants conspired to defraud financial institutions. They are accused of using a variety of ways to induce mortgage lenders to issue loans for apartment complexes for greater amounts than the lenders would have issued loans for, had they known the truth.
Among the allegations from the government are that the defendants provided false information about how much income was generated by these properties and conspired to prevent inspectors touring the properties from discovering vacant units.
"They would do things, essentialy staging the units, making units appear as though they were occupied by doing things like placing mats and shoes outside the apartment, turning on radios and turning on televisions in the apartments to make them appear as if they were occupied," Kennedy said.
Most of the loans acquired were then sold to Fannie Mae or Freddie Mac, according to Kennedy.
The indictment alleges fraud at seven different properties including Avon Commons in Avon, NY; Morgan Ellicott Apartments and Amherst Garden, both in Buffalo; Rugby Square in Syracuse; and Rochester Village, Southpointe and Eden Square, all in the Pittsburgh area.
Todd Morgan is the son of developer Robert Morgan, who manages a portfolio of 33,000 multi-family units mainly in the Northeast and has many more under development. Kevin is Morgan's nephew and was a Vice President at Morgan Management. Todd Morgan was a project manager there. Giacobbe owned Aurora Capital Advisors and Ogiony worked for him as Managing Director.
Robert Morgan was not named in this indictment. Recently FBI agents searched his company’s offices in Pittsford and, afterward, he issued a statement saying that Morgan Communities continues to cooperate with a federal inquiry and continues to be current on all of its loan obligations.
On Wednesday, he released this written statement: "In light of recent events, Kevin Morgan and Todd Morgan have been suspended without pay from Morgan Communities, effective immediately.
"Morgan Communities continues to cooperate with a federal investigation related to federally backed loans placed to several developers through a specific mortgage broker.
"We have been and continue to be current on all loan obligations."
Here is the full indictment, courtesy of WXXI News, Rochester on Scribd.