The United States has intervened in a New York short-sale fraud case by filing a civil suit, documents unsealed by a U.S. District court judge on Monday show.
The complaint unsealed by Judge Margo Brodie in the Eastern District of New York alleges defendants engaged in False Claims Act violations related to short sales of properties that had Federal Housing Administration-insured mortgages. The suit seeks treble damages and civil penalties.
Named in the complaint as allegedly engaging in fraud with co-conspirators are Iskyo Aronov, Ron Borovinsky, Michael Konstantinovskiy, and companies that they owned or controlled. Court records show summons were issued to all three on Tuesday. Attorneys representing the defendants could not be immediately reached for comment.
The new complaint intervenes in a lawsuit originally brought in 2016 under the qui tam provisions of the FCA, which allow entities with evidence of wrongdoing to sue on behalf of the federal government and share in the recovery, according to the U.S. Attorney’s Office for the Eastern District of New York and court filings.
The defendants face allegations that they misled mortgage companies into approving short sales at fraudulently depressed prices when the properties in question were actually being resold at a large profit. (In a short sale, properties can be sold for less than the balance of the mortgage if the sale price represents a fair market value.)
“As alleged, these defendants fraudulently obtained homes at depressed prices at the expense of a taxpayer-funded program designed to assist borrowers seeking the American dream of homeownership,” said Acting U.S. Attorney Seth DuCharme in a press release Monday. “This office is committed to protecting the integrity of the FHA insurance program from those who try to enrich themselves through predatory mortgage fraud schemes.”
Two of the three defendants, Aronov and Konstantinovskiy, also were named in an indictment unsealed in 2019 alleging their involvement with co-conspirators in short-sale fraud.
