Gennaro Rauso, who owned and operated a real estate management company that purported to help financially distressed homeowners with their foreclosure problems, was charged today by information with several mortgage fraud related offenses. The information alleges that as part of his scheme, Rauso took advantage of desperate homeowners with the promise of staying in, or saving, their homes when, in fact, he was using them to defraud the mortgageThe indictment can be found here. It begins:
holders.
1. Defendant GENNARO RAUSO owned and operated several propertyThere's a lot more.
management businesses, including D&B Property Investors (“D&B”), which he incorporated on June 17, 2005.
2. Defendant GENNARO RAUSO falsely claimed that D&B helped homeowners with foreclosure problems. In fact, defendant RAUSO operated D&B as part of a scheme to defraud mortgage companies by convincing distressed homeowners to transfer their properties to D&B for a nominal sum, and then renting the properties back to the homeowners. Defendant RAUSO then used the federal bankruptcy process to, among other things, substantially delay and obstruct efforts by mortgage companies to foreclose upon these properties, thereby providing the opportunity for defendant RAUSO to collect rental payments fraudulently from the distressed homeowners during the period of delay, without making any required payments to the mortgage companies.
THE SCHEME
3. From at least in or about January 2005 through at least in or about December 2008, defendant GENNARO RAUSO devised and intended to devise a scheme to defraud and to obtain money and property by means of false and fraudulent pretenses, representations and promises.
MANNER AND MEANS
It was part of the scheme that:
4. Defendant GENNARO RAUSO purchased lists containing the names and addresses of homeowners facing immediate foreclosure and sheriff’s sale of their properties. Defendant RAUSO used these lists to identify potential victims of his scheme to defraud.
5. Using the United States mails, defendant GENNARO RAUSO sent to homeowners a flyer that claimed, among other things, that defendant RAUSO could help the homeowner with foreclosure problems. Defendant RAUSO used an alias when he sent out the flyers, including but not limited to, “Lorraine Foster.” When homeowners called the telephone
number on the flyer, however, they spoke to defendant RAUSO.
6. Since at least in or about January 2005, defendant GENNARO RAUSO mailed various versions of the flyer. For example, in a version sent in or about December 2008, purportedly from “Lorraine Foster,” defendant RAUSO claimed that:
a. he was interested in purchasing their property, “subject to all liens and encumbrances,” even if the home “does not have any equity;”
b. he would “take all the headache of fighting the bank or mortgage company off your hands,” and “possibly even allow you to stay in the property for less than what you were paying each month;”
c. for some of his past clients, he was able to “assist them in getting their credit re-established; and as a result, they were able to re-purchase the property thereafter;”
d. even if “things don’t work out” and the property were to be sold at Sheriff’s sale, defendant RAUSO could help the homeowner “stay in the property for about another 12-18 months even after the sheriff sale;” and
e. “an associate” would tell the homeowner how defendant RAUSO “stalled his personal foreclosure for Sixteen years without paying a dime to either the mortgage company or the tax bureau; purchased the property back for approximately Twenty Cents on the dollar free and clear of all the previous liens and judgments that had been on the property, and then flipped it for a Twenty Thousand Dollar Profit.”
7. Defendant GENNARO RAUSO timed the mailing of the flyers so they would arrive only a few days before the scheduled sheriff’s sale of the property. Defendant RAUSO believed that this was the time period when homeowners would be most desperate and most likely to call for his purported services.
8. After the homeowners contacted defendant GENNARO RAUSO, either defendant RAUSO or an employee of D&B visited the homeowner to have the homeowner sign a series of documents, which:
a. transferred the property either to defendant RAUSO or to an entity controlled by defendant RAUSO, for a nominal purchase price;
b. gave defendant RAUSO power of attorney rights with respect to the property, including the power to negotiate on the homeowner’s behalf with the mortgage companies, to file federal bankruptcy petitions, and to otherwise dispose of the property; and
c. made the homeowner a tenant, who would make rent payments to defendant RAUSO instead of payments to the mortgage company.
9. After the homeowner signed these documents, defendant GENNARO RAUSO obstructed the foreclosure proceedings against the property by, among other things, filing federal bankruptcy petitions.
10. Defendant GENNARO RAUSO collected rent payments from the homeowner during the period the foreclosure was obstructed and delayed, but did not make payments to the mortgage companies holding the mortgage. Defendant RAUSO was, therefore, able to use the federal bankruptcy process, among other means, to defraud mortgage companies out of payments from homeowners, when those payments should have been made to the mortgage companies to pay down the mortgage balances.
11. As part of this scheme to defraud, defendant GENNARO RAUSO used at least 200 homeowners and their properties, almost entirely all of which were located in the Eastern District of Pennsylvania. Overall, defendant RAUSO defrauded mortgage companiesout of more than $400,000 in diverted and lost mortgage payments.
I first heard about Rauso three years ago, when he piled nine tenants into the Darby Township home of Makra Opoku. First, he got her to sign papers giving him power of attorney and control of the property, then the tenants came. He charged them all rent, including Opoku, and he never sent a nickel of the money to the mortgage company to stave off foreclosure.
Over the years, I heard from a dozen more people who credibly claimed to have been scammed by Rauso. Despite complaint after complaint to the local authorities and to the FBI, Rauso continued to ply his trade.
According to federal documents, Geno didn't pay taxes on some $1.6 million he made between 2005 and 2008. He was quite the operator and quite a character.
The first time I talked to him he was literally on his way to Delaware County prison to serve one of his weekends for assaulting a tenant in Opoku's home.
The last time I talked to him it was about another dissatisfied client.
“I made my position clear to you (last year) that I prefer you never call me again,” he said.
I told him I understood, but that I had to call him to see if he wanted to comment, just to be fair.
“What is also fair,” he said, “is I not violate my Fifth Amendment right not to incriminate myself and my First Amendment right not to talk to you.”
Fair is fair. Besides actions speak louder than words, anyway.
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