ITHACA, N.Y. – A 114-count indictment against developer Robert Morgan and three other defendants was unsealed on Wednesday, including charges of conspiracy to commit wire fraud and bank fraud as part of a half-billion dollar mortgage fraud scheme carried out over more than a decade. Morgan was CEO of Morgan Management LLC during the alleged conspiracy, a large regional development firm with ties to at least two Ithaca properties.
According to the U.S. Attorney’s Office in the Western District of New York, Robert Morgan falsified financial information in order to obtain loans along with Todd Morgan, his son and a project manager at Morgan Management; Frank Giacobbe, who owned and operated Aurora Capital Advisors; and Michael Tremiti, who was director of finance for Morgan Management. The four face charges carrying a maximum sentence of 30 years in prison and fines exceeding $25 million.
“The charges announced today reflect this Office’s commitment to ensuring that those who do business with the mortgage, banking, and insurance industries act with honesty and integrity,” U.S. Attorney James P. Kennedy Jr. said in a media statement.
The defendants are accused of falsifying information to obtain loans, assets and securities from private banks as well as Freddie Mac and Fannie Mae.
“The false information induced financial institutions to issue loans: (1) for greater values than the financial institutions would have authorized had they been provided with truthful information; and (2) that the financial institutions would not have issued at the time of issuance had they been provided with truthful information,” a news release from the U.S. Attorney’s Office of Western New York reads.
No Ithaca properties are directly linked to the indictment, but Morgan’s companies have ties to the Gun Hill apartments at 210 Lake St. in Ithaca and City Centre apartments at 301 E. State St.
The Gun Hill apartment complex is not currently listed under Morgan Communities’ properties online and appears to be in the midst of a sale, but the Tompkins County Assessment Office confirmed Thursday that Morgan still owns the property.
City Centre’s owner, Newman Development Group, previously contracted a company affiliated with Morgan to manage the property but is in the midst of transitioning to a new management agreement. According to Marc Newman, managing member of NDG, Grand Atlas Property Management was contracted to manage City Centre until recently. Grand Atlas is partly owned by defendant Michael Tremiti and acquired Morgan Management in 2018, according to the indictment. Newman said the shift from Grand Atlas to a new management company will have no impact on the property, which is due to open in June.
Several properties in Rochester, Syracuse and across Upstate New York are named in the indictment, as well as properties in Pennsylvania and Indiana. Morgan and the three other defendants are accused of keeping two sets of books for at least 70 properties, “with one set of books containing true and accurate figures and a second set of books containing manipulated figures to be provided to lenders.”
The indictment alleges the defendants conspired to manipulate income and expenses by providing falsely inflated construction contracts to lenders, reporting that they paid more to contractors than was delivered, and using varied tactics to mislead inspectors, appraisers, financial institutions and Fannie Mae and Freddie Mac. The indictment states that employees placed radios inside vacant apartments and shoes outside the doors at one property and created eighteen fictitious leases at another to make it appear as if there were more renters and boost the value of properties.
The U.S. Attorney’s Office estimates the total loss to financial institutions and federal housing finance agencies from mortgage fraud to be more than $25 million. The defendants could face fines up to double the amount of loss caused by the crimes if found guilty.
U.S. Attorney Kennedy said in a statement, “The scope of the dishonesty and deceit alleged here—both in a geographic sense as well as in terms of the dollar value of the mortgages and properties involved—was expansive. This type of fraud strikes at the very heart of those industries.”
Three defendants have been found guilty for their involvement in the alleged scheme. Kevin Morgan, who was a vice president at Morgan Management, and Patrick Ogiony, who was managing director at Aurora Capital Advisors, were convicted of conspiracy to commit bank fraud. Scott Cresswell, who was COO of Morgan Management and then part-owner and CEO of Grand Atlas, was convicted of conspiracy to commit wire fraud. All three are awaiting sentencing.
Read the full indictment below.
Robert Morgan indictment by on Scribd