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Stetch worked at the law firm of Kenneth B. Schwartz, Esq., in Carle Place, L.I.
By Forum Staff
Crime doesn’t pay. That’s a lesson made very clear to a Long Island attorney who will now spend time in prison after admitting she defrauded Queens homeowners out of more than $2 million in mortgage proceeds. A second defendant n the same case pleaded guilty previously.
District Attorney Richard Brown said the two defendants created a “financial nightmare” for the buyers and the sellers of nearly half a dozen Queens properties. “The victims in this case only discovered that something was amiss when foreclosure notices for the pre-existing mortgages were served several months after the supposed ‘short sale’ closings,” said DA Brown. Homeowners were tricked into selling their properties and believed their mortgage obligations were being satisfied while the buyers and new mortgage lenders were deceived into believing that the purchased properties were free and clear.
Helene Stetch, 53, of Lindenhurst, worked with attorney Kenneth Schwartz at the law firm of Kenneth B. Schwartz, Esq., located at 555 Westbury Avenue in Carle Place, New York, until her termination in mid-2010. Schwartz, 67, of Huntington, New York, took a conditional guilty plea to fourth-degree criminal facilitation and disorderly conduct on January 13, 2017.
Stetch, who pleaded guilty to one count of first-degree criminal possession of stolen property and six counts of second-degree grand larceny was sentenced to seven concurrent terms of 1 1/3 to 4 years in prison. Additionally, Stetch executed eight confessions of judgment totaling approximately$2,325,043.00.
According to the criminal charges, the law firm of Kenneth Schwartz represented sellers, lenders, and sometimes buyers, in the sale of several houses in Queens County, in which the closings were held at the defendants’ Carle Place law offices between October 2008 and May 2010. In each transaction, the seller was delinquent on the mortgages and sought to sell the property in a short sale to avoid foreclosure. The mortgages on the houses involved typically had a first and second lien holder, both of whom had to approve of the sale..
According to the charges, Stetch represented the property sellers and engaged in short sale negotiations with the goal of persuading the underlying lien holders to accept less than the outstanding mortgage. Stetch proceeded to closing without the short sale approval from both lien holders on any of the properties, and although having proceeded with a sale, Stetch failed to pay off the underlying mortgages. In fact, she continued short sale negotiations – ranging from a few months to more than a year – with the lien holders as if no sale had yet occurred. Since the law firm of Kenneth Schwartz was the lender’s settlement agent, mortgage loan funds were wired into an attorney trust account in Kenneth Schwartz’s name and for which Schwartz and Stetch were the only authorized signatories on the account. Disbursement of the funds was conditioned upon certain things taking place – including, paying off the underlying mortgages and recording the new mortgages so that the lender would be in position of first lien holder; preparing HUD settlement statements that correctly listed how the mortgage proceeds would be disbursed; and obtaining title insurance on behalf of the lender. In fact, the underlying mortgages were not being paid off, the HUD settlement statements falsely indicated that there were no underlying mortgages to be paid off, and no title insurance was purchased.
Instead, unauthorized and excessive disbursements were made from the attorney trust account where more than $1 million in mortgage loan funds were wired – with Stetch writing the majority of the disbursement checks and Schwartz writing all checks that were payable to himself and a few other checks.
