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25 charged in $100 million mortgage fraud

Manhattan District Attorney charges 13 suspects and a mortgage company with fraud; 12 others have already pleaded guilty.

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By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The Manhattan district attorney indicted 13 suspects and a mortgage company on Wednesday for running a $100 million mortgage fraud, in which they allegedly fooled banks into financing sham sales.

District Attorney Robert Morgenthau said that 25 people were involved in the scheme including 12 who have already pleaded guilty.

The 13 newly-indicted individuals and the mortgage company, AFG Financial Group, were charged with enterprise corruption, grand larceny, scheme to defraud and conspiracy for participating in 19 fraudulent real estate transactions, according to the D.A.'s office. The most serious felony, enterprise corruption, carries a sentence of up to 25 years.

The suspects included Aaron Hand, Eugene Culbreath and Eric Shields, all founders of AFG, which is based in Garden City, Long Island. The D.A.'s office said that Hand, the company president, "ultimately controlled the criminal enterprise."

Lawyers for Hand and Culbreath were not immediately available.

The D.A.'s office said the following banks were ripped off over a four-year period, ending in April: Countrywide, New Century Bank, Saxon Bank, Greenpoint Bank, ABC Bank, Bank of America, Wells Fargo and SunTrust. Some of the defendants were bank employees, according to the D.A.

"The conspirators caused the banks to front millions of dollars to finance purchases of the properties," read a statement from the D.A.'s office. "They then walked away with most of the cash, leaving behind over-valued properties and worthless mortgage papers."

The D.A.'s office described a "particularly brazen sham transaction" where one of the suspects, Stephen Martini, allegedly wrote up a bogus appraisal of $500,000 for a two-family home, but "in reality, the location was a vacant lot." To top of page

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