BUFFALO, N.Y. — A federal grand jury has returned a 62-count federal indictment charging four people in a multi-million dollar mortgage fraud scheme.
The indictment follows last week's raid of Morgan Management headquarters in Perinton. The company operates apartment buildings in Buffalo and Rochester.
The company belongs to developer Bob Morgan, who has a number of ties to area projects, including a proposed entertainment complex at Parcel 5.
Federal prosecutors say that four people deceived creditors for six years and received bank loans totaling more than $167 million.
According to court paperwork, the men inflated rent rolls and overstated occupancy, fooling mortgage companies into thinking more people were living in their properties than actually were. In one such case, investigators say they hired someone to 'stage' an apartment to look as if there were tenants living in the building. In another case, prosecutors say one of the men emailed the others asking where $72,000 in storage space figures came from. Prosecutors say it was Kevin Morgan who then replied: 'Magic.'
According to company websites, Morgan Communities and Morgan Management, both led by Robert Morgan, own 140 properties across 14 states.
U.S. Attorney James Kennedy announced a 62-count indictment charging two Buffalo men, Frank Giocobbe and Patrick Ogiony, and two Rochester men, Kevin and Todd Morgan, with several bank and wire fraud crimes.
"We are looking at everything," Kennedy said Wednesday morning. "These are properties we identified and it's where we started. We're only really at the beginning of this investigation in many regards, there is much to be examined still. We're going to do that - and we're going to continue to do that diligently and with all dispatch to try and bring to justice anyone who was involved in this illegal activity."
The charges carry a maximum penalty of 30 years in prison and $1 million fine.
Among the numerous accusations, the four allegedly staged empty apartments to appear occupied when banks inspected properties before approving loans.
Robert Morgan issued a statement Wednesday saying that Kevin and Todd Morgan have been suspended without pay.
The following properties are listed in the indictment:
- Morgan Ellicott Apartments and Amherst Garden in Buffalo
- Rugby Square in Syracuse
- Avon Commons in Avon
- South Pointe and Eden Square in Pittsburgh
Kevin Morgan is also accused of misplacing a radon detector at the Eden Square complex at the instruction of Giacobbe. The two violated the instructions from the testing company by placing the device on a top floor unit with the window open.
Giacobbe is accused of conspiring to create a false payoff letter back in 2014 related to Avon Commons, a multi-family residential apartment complex in Livingston County.
City of Rochester officials released a statement Tuesday evening:
“The City of Rochester is paying careful attention to any ramifications today’s indictments may have related to ongoing projects and investments in our city. Morgan companies are an important corporate citizen and they provide jobs and livelihoods to many of our neighbors. We believe everyone deserves the right, afforded them by the US Constitution, of presumed innocence until proven guilty and this case certainly is no different. And while we do not prematurely rush to judgement, we will nonetheless continue to exercise all necessary due diligence to protect our community’s taxpayers, just as we have in the past.”