Man Pleads Guilty In Mortgage Fraud Scheme Involving $167M

The nephew of a New York real estate mogul has pleaded guilty to a misdemeanor charge in a mortgage fraud case involving $167 million.

Kevin Morgan, former vice president of Morgan Management and Morgan Communities, pleaded guilty to bank larceny on Tuesday.

Morgan admitted to submitting false documents to ESL Federal Credit Union for a construction loan.

The charge carries a fine of $100,000 and one year in prison, though Morgan will serve no jail time due to his plea deal. It is expected he will be sentenced on Oct. 20.

Morgan had previously pleaded guilty to felony conspiracy to commit bank fraud. The new plea is a lesser charge and supersedes his original admission. It is the result of his cooperation with the investigation of his uncle, Robert C. Morgan.

Morgan claims that his uncle directed him to participate in the scheme, in which they provided fraudulent information to lenders in order to obtain mortgages worth $167.5 million for apartment complexes in Buffalo and other cities.

The Morgan companies are some of the largest owners of apartments in Western New York. They own, co-own, or manage 3,500 apartments in the Buffalo area alone, and 36,000 units in 14 states.

Morgan’s cousin and two other company execs are also indicted in the scheme.

Mortgage fraud is on the rise. CoreLogic’s Quarterly Mortgage Fraud Brief found that though fraud risk has diminished recently, the trend is reversing and it will increase in the coming months.

Miami is currently the city with the highest mortgage fraud risk.