A father and son were charged today in an alleged scheme in which the father allegedly promised to rescue homeowners facing foreclosure, but instead sold their homes to investors and conspired with the son to steal $4.5 million from lenders by filing fraudulent mortgage applications in the investor's names, according to Attorney General Jeffrey Chiesa.
Vito Grippo, 47, of Jackson and his son, Frederick Grippo, 32, of Old Bridge, were charged by a complaint summons with conspiracy and theft by deception. Vito Grippo was also charged with money laundering and theft by failure to make required disposition of property received, according to the Office of the Attorney General.
All of the charges are in the second degree and are the result of an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau, according to the Office of the Attorney General.
Each charge carries a sentence of five to 10 years in state prison.
“We allege that Vito Grippo preyed on homeowners who were facing foreclosure, cheating 12 victims out of their homes and stealing $1.3 million in equity they had built up,” said Attorney General Chiesa in a press release.
“He allegedly solicited investors and bought the homes in their names without their knowledge, so that he and his son could fraudulently obtain $4.5 million in loans and divert the proceeds. The end results were lost homes for former homeowners, ruined credit for investors, and major losses for lenders,” he said.
The investigation is being conducted for the Division of Criminal Justice by Supervising Deputy Attorney General Francine S. Ehrenberg, Deputy Chief of the Financial & Computer Crimes Bureau, Detective Martin Farrell and Sgt. Robert Walker.
According to the Office of the Attorney General, Vito Grippo had an office in Holmdel and operated several companies, including Morgan Financial Equity Shares, Inc., Jandevar, LLC, and Vanick Holdings, LLC.
Vito allegedly solicited financially distressed homeowners, saying he could rescue them from foreclosure and fix their credit rating by transferring title to their homes temporarily to a company called Morgan Financial, according to the Office of the Attorney General. He allegedly represented that the homeowner would retain an 80 to 90 percent interest in the home, while Morgan Financial and an investor would share the remaining 10 to 20 percent interest.
He allegedly told the homeowners to make their monthly mortgage payments to Morgan Financial, and Morgan would pay the lender, reducing their payments over time and giving them back full title to their homes in a year. He later sent letters to the homeowners telling them their mortgage payments had greatly increased.
At the same time, Vito allegedly solicited investors who were led to believe that they would be investing through Morgan Financial in income generating rental properties.
Investigators say that the investors did not know that they were actually buying the homes outright. Vito allegedly used the identities of the investors to file fraudulent mortgage applications to purchase the homes, according to the Office of the Attorney General.
Vito's son, Frederick Grippo, who was a loan broker, allegedly conspired with the father to submit fraudulent applications. The pair allegedly created and submitted false documents for investors, including W-2 forms and bank statements, and asserted that the investors planned to live in the homes as their primary residences, according to the Office of the Attorney General. Vito Grippo allegedly had both the original homeowners and the investors sign documents without giving them time to ascertain what they were signing.
Vito was charged in connection with 12 homes in total in both New Jersey and New York, including one in Elizabeth, one in Jersey City, one in Rutherford, one in Monroe, one in Somerville, one in Mine Hill, three in Brooklyn, two in Staten Island, and one in Cambria Heights.
He allegedly submitted fraudulent loan applications to obtain a total of more than $4.5 million to purchase the homes. It is alleged that Vito Grippo in turn stole more than $1.3 million in loan proceeds that should have been disbursed to the original homeowners as equity at closing, according to the Office of the Attorney General. He allegedly diverted those funds into bank accounts of his companies to launder the money.
It is further alleged that he then disbursed the funds to himself and other co-conspirators. Frederick Grippo allegedly was involved in seven of the fraudulent loan applications and received checks from Morgan Financial for his participation in the fraud, according to the Office of the Attorney General.
The defendants allegedly filed false HUD forms to conceal the improper payments. Although Vito Grippo made some mortgage payments on the loans in the names of the investors, he did not continue them and all of the homes fell into foreclosure. The original homeowners lost the properties and the investors’ credit ratings were ruined, according to the Office of the Attorney General.
Another man, John Pereless, 44, of Colts Neck, was involved in this type of mortgage fraud, and he allegedly conspired with Vito Grippo in connection with four of the 12 home sales with which Grippo is charged, according to the Office of the Attorney General.
Pereless pleaded guilty on July 2, 2012, before Superior Court Judge Verna G. Leath in Essex County to an accusation filed by the Division of Criminal Justice charging him with two counts of second-degree theft by deception for filing fraudulent mortgage loan applications and stealing $661,261 in equity due to home sellers in connection with 14 homes, including the four transactions involving Vito Grippo, according to the Office of the Attorney General.
Under his plea agreement, Pereless faces a 10-year prison sentence, which will run concurrently with an eight-year sentence stemming from his conviction at trial in 2010 in another mortgage fraud case prosecuted by the Monmouth County Prosecutor’s Office.
The complaints are merely accusations and the defendants are presumed innocent until proven guilty. Because the charges are indictable offenses, they will be presented to a state grand jury for potential indictment.
The Division of Criminal Justice has established a toll-free tipline 1-866-TIPS-4CJ for the public to report corruption, financial crime and other illegal activities. The public can also log on to the Division webpage at www.njdcj.org to report suspected wrongdoing. All information received will remain confidential.