Bloody Toto in Mortgage Fraud Land

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Bloody Toto in Mortgage Fraud Land

Post by Guysanto » Tue Jun 12, 2007 8:42 am

Bloody Toto in Mortgage Fraud Land

This post was written by Carola Von Hoffmannstahl-Solomonoff on 10 June, 2007 (16:27)

During the halcyon years of the housing bubble, mortgage fraud flourished like the green bay tree. The same EZ lending, lax oversight and belief in non-stop real estate inflation which pumped subprime excess also helped fraudsters party hearty. Among the revelers was Emmanuel Constant. Aka “Toto” Constant. Currently of New York, formerly of Haiti. In February 2007, Constant pleaded guilty to grand larceny charges in the New York State Supreme Court in Brooklyn. The charges sprang from mortgage frauds committed in Brooklyn and on Long Island: they were part of a series of frauds committed by overlapping groups of organized mortgage crooks based in New York and New Jersey. Numerous lending and financial institutions were impacted, many of them major players. Some of the fraudulent loans were backed by the federal government. Most flowed into the secondary mortgage market to be repackaged as asset backed securities.

Toto Constant's crimes could have sent him to jail for 5 to 15 years. But when Toto appeared in court for sentencing in mid May, lawyers representing the U. S. Department of Homeland Security and the New York State Office of the Attorney General requested that Justice Abraham G. Gerges sentence Constant to time served (10 months) and deport him to Haiti post haste. U.S. Immigrations and Customs Enforcement (ICE) backed up the request via letter.

Who is Toto and why are people saying such lenient things about him?
Born in Haiti in 1956, Emmanuel Constant's father was Gerard E. Constant, commander of armed forces during the regime of Francois (Papa Doc) Duvalier. Elected president in 1957, Papa Doc soon made himself President-for-Life. He also created the Tonton Macoute, a paramilitary group modeled after Hitler's Brownshirts. The name “Tonton Macoute” evoked a bogeyman who in Haitian tradition, snatches up bad children on Christmas Eve. Papa Doc's version of Santa's evil twin snatched up political dissidents 365 days a year. Though well armed with firepower, the Tonton Macoutes favored machetes. They also cultivated the image of being Vodou (aka voodoo) demons or zombies.

In a land of extreme political repression and poverty, Emmanuel Constant grew up a member of a tight little privileged class. Attending private schools in Haiti, and college in Montreal. At college he became computer savvy and collected a salary from the Haitian embassy for promoting Haitian businesses. By 1984, Toto was living in the borough of Queens in New York City. As a U.N. diplomat he represented Haiti under the rule of Papa Doc's son, Jean-Claude “Baby Doc” Duvalier. In 1986, Baby Doc was forced to flee to Europe. The uprisings were getting hairy.

For Toto Constant, Baby's departure meant no money from home. In 1988, Toto returned to Haiti. Several brief interim governments followed Baby Doc's abdication. In 1991 Jean-Bertrand Aristide, a former Catholic priest who preached liberation theology was elected president. Though subject to totalitarian temptation, Aristide was a democratically elected president. He received 67% of the vote, with overwhelming support from the poor.


The World According to Toto*

In Haiti, Emmanuel Constant became a consultant to officials in the Haitian Army. According to Toto he was helping set up a nationwide telecommunications system. In 1991, a military coup toppled the Aristide government. According to Toto, at the time of the coup he was in Miami, tending his dying father. Between 1992 and 1994 Toto collected a stipend of $700 per month from the CIA. A not insignificant sum in a country where the average per capita income was a few hundred dollars per year. According to Toto the CIA valued the telecommunications work he did for the military. They also valued the computer skills he employed as director of social affairs in the post coup Haitian government — including his access to extensive databases re his fellow Haitians.

Apparently being a geek for the post-coup crowd and CIA wasn't enough for Toto. He also co-founded a paramilitary, Duvalierist group, the Front for the Advancement and Progress of Haiti. Aka FRAPH. In Haitian Creole, FRAPH sounds like the word for “hit”. Between 1993 and 1994 FRAPH allegedly terrorized thousand of Aristide supporters. FRAPH's tactics included murder, arson, beatings, and gang rape. Hatchets were among their weapons of choice. In October, 1993, a U.S. Navy ship, the Harlan County, attempted to dock in Port-au-Prince. The ship carried several hundred American and Canadian troops, an advance force of an attempt to restore Aristide. FRAPH was waiting on the dock with guns and anti-American slogans. The Clinton administration said turn the beat around. The Harlan County returned to the U.S. and Aristide's restoration didn't happen until October, 1994. Soon after Toto decided it was time to fraph the road. In late ‘94 he entered the U. S. via Puerto Rico on a tourist visa.


Home on the Range

Folks in Haiti were hot to get Toto back. They had plans for the FRAPH man. They said “trial”. Toto said “death”. He also said reports of FRAPH's activities were greatly exaggerated. Toto turning up stateside was a political embarrassment for the Clinton administration. In February, 1995, Toto's visa was revoked and he was jailed while awaiting deportation. In return, Toto did an interview with 60 Minutes and revealed his relationship with the CIA. Hinting he might dish more. The State Department eventually confirmed a past relationship between Toto and U.S. intelligence agents, but played coy re details. A common theory is that while the Clinton administration publicly backed the return of democratically elected Aristide, in private they distrusted his radical leftism. And that the FRAPH demonstration which served to deflect the Harlan County was no surprise.

In June, 1996, Toto got out of jail almost free. The deportation order, though not lifted, wasn't enforced. In August, 1997, the U.S. Immigration and Naturalization Service (INS) declared “returning Constant to Haiti would place an undue burden on the Haitian judicial system”.** Toto was allowed to reside in New York City, but was required to check in periodically with INS. Now called Immigration and Customs Enforcement. Aka ICE.

Sans government support Toto had to make a living. For awhile he sold phone cards, then moved on to real estate. By 2000, Emmanuel Constant was working at Rigaud Realty Services in a heavily Caribbean section of Queens. But the past came back to haunt. Protesters showed up outside his office. Bad publicity meant Toto had to go. Toto denounced the groups organizing the protests: the Center for Constitutional Rights, the Haiti Support Network, and the Alliance of Haitian Emigrees. Meanwhile, Toto had been convicted in absentia in Haiti for a group of FRAPH murders. In a 2000 interview with Munthit Ker, a reporter from Columbia News Service, Toto's attorney, Jean D. Larosiliere, called the charges “baseless” and talked about Toto's tough time making a living. He also said Toto was currently working as a consultant at an unspecified company, doing “a little bit of this and a little bit of that”. Despite Toto's job problems he had no problem obtaining the services of Jean Larosiliere.

In 2001, Jean Larosiliere received an Alumni Professional Achievement Award from Fairfield University in Fairfield, Connecticut. According to a profile published in connection with the award, ‘85 alumni Jean Larosiliere joined the U.S. Justice Department in 1990, and was still working for the agency as a consultant in 2001. Larosiliere was born in Haiti. He returned for a time in 1994 as part of an effort by the United States Agency for International Development to establish a training facility for prosecutors and judges. In the USA, Larosiliere had opened his own law firm, Larosiliere & Associates LLC, in Newark, New Jersey. Specialties included immigration law, criminal law, and real estate.

A different picture of Jean Larosiliere emerged in late 2005 when he was disbarred in New Jersey for misappropriating a client's trust funds. The disbarment followed a series of license suspensions for other ethical lapses. Larosiliere didn't show up for the disbarment hearing: it was assumed he'd abandoned his practice. 2005 wasn't a good year for Emmanuel Constant either. Several Haitian emigree women who'd been tortured and gang-raped by FRAPH soldiers filed a federal lawsuit against him in New York State. The suit was filed with the assistance of the Center for Constitutional Rights. In 2006 the women won their case. Toto was held liable for 19 million dollars. Then there were the real estate frauds…


Unreal Estate

In July, 2006, Toto was arraigned on charges resulting from a large scale investigation into mortgage fraud in the New York metropolitan area. The investigation was spear-headed by the Organized Crime Task Force of the office of the New York State Attorney General. At the time, Eliot Spitzer was AG. The State Banking Department, the State Insurance Department, the FBI and U.S. Department of Labor were also on board. Constant had been working as a licensed mortgage broker for New York Mortgage Co. in their Melville, Long Island branch office. Long Island is a regional center for the mortgage industry. Until recently, New York Mortgage, which acts as mortgage broker and direct lender, was a subsidiary of New York Mortgage Trust. In early April, 2007, New York Mortgage Trust restated their 4th quarter losses for 2006, blaming the bigger-than-originally-reported bads on their mortgage lending business. In late March, New York Mortgage Co. was sold to IndyMac Bank of IndyMac Bancorp.

New York Mortgage was not the only Long Island place of business for Emmanuel Constant. He was also branch manager of D&M Mortgage in Suffolk County. D&M Mortgage & Investment, aka D&M Financial Corp., was a mortgage bank based in Belleville, New Jersey. D&M began operating in 1995. A number of real estate professionals with ties to D&M were at the epicenter of the frauds that brought Constant down. D&M was owned by Dimitri Michalaki (aka Jimmy Michalaki or Dimitris Michalaki) and his wife, Margherita Michalaki. In early 2005, First American Title Insurance issued an alert re D&M Financial, as headed by Demetris and Margherita Michalaki. Margherita is listed as President, CEO and director of D&M on corporate info on record with the Arizona Corporation Commission. And Dimitri is referred to as “director” in a civil lawsuit filed against D&M in April, 2005 in the Eastern District of New York by EMC Mortgage Corporation, a division of Bear Stearns.

EMC, among other things, buys mortgages to sell on the secondary market. In their lawsuit, EMC claimed to have unknowingly purchased 42 fraud-ridden loans that D&M originated. EMC and 11 other lenders who filed suit against D&M in Brooklyn weren't successful in their effort to make D&M repurchase its bad loans. A similar action against D&M Financial was filed in New Jersey in November, 2004 by Aurora Loan Services, a Lehman Brothers Company. Aurora had better luck and was awarded a summary judgment.

D&M also has a history of being sued by individuals who believe they were scammed by D&M. In one case, a contractor sold what he called a home repair loan to a family in Paterson, New Jersey. The contractor wasn't registered with the state, shared an address with D&M, and eventually disappeared. The home repair loan turned out to be a second– and extremely predatory– mortgage. The mortgage was brokered and later sold to another lender by D&M. In another instance, a Brooklyn family alleged that D&M, in concert with several persons and entities, including real estate attorney Ida D'Angelo of Melville, Long Island, and Morequity, a subsidiary of American General Finance, tricked them into deeding away their home via what the family thought was a second mortgage. Both families had modest incomes, little financial sophistication, and wound up losing homes they'd owned for decades.

Individuals with D&M connections have also figured in legal actions not related to D&M. In March, 2007, Lehman Brothers Bank lost an appeal before the Appellate Division of the Superior Court of New Jersey, in a case involving MorEquity. (Aka Morequity.) Apparently MorEquity was the innocent middleman in a multi-million dollar criminal mortgage fraud which impacted Lehman. Lehman claimed MorEquity was Not That Innocent and wanted the Lehman Bank lien on the property in question to superceed that of MorEquity. The fraud at the root of the case involved a number of New Jersey players. Among them, Andreas Perdikos, a real estate appraiser whose New Jersey license was lifted in 2004. Andy Perdikos was an alumni of the D&M office in Belleville. He was also cited in the 2005 civil suit filed in New York by EMC Mortgage against D&M. Among other things, EMC claimed Perdikos wasn't a licensed appraiser in New York “although he represents himself as such”.

EMC didn't get it. When Andy needed a license he just forged the name of an appraiser who had one.

At times Andy Perdikos resided in Jersey. Other times he hung in Suffolk County on Long Island. In 2004-05, Andy sold his Suffolk County home twice over an eleven month period. To straw buyers who obtained mortgage loans but never moved in. Emmanuel “Toto” Constant supplied the phony buyers for a sale which netted $1.3 million. The loan was funneled through Sun Trust Mortgage Bank by mortgage broker Lincoln Esteves of Newark, New Jersey. Toto took a $50 thousand cut. The other sale was financed by Freemont Investment and Loan. Both sales were greased by real estate attorney Frank DeGrasse of Long Island. Degrasse represented the lenders in both deals, hid the identity of the property's true owner, misrepresented the dispersal of bank funds at closings, and forged various documents. Toto also forged docs. Unlicensed Andy provided the inflated appraisals. Both DeGrasse and Toto have pleaded guilty to charges related to Andy's incredible bouncing house.

When not on Long Island, Andy Perdikos was busy in nearby Brooklyn and Queens. Working with mortgage banker Louis Sandella. Like Toto and Andy, Lou was a D&M guy. Lou Sandella headed the Sandella Group, a ring of alleged mortgage crooks operating primarily in Brooklyn and Queens, and on Long Island. Emmanuel Constant has pleaded guilty to participating in some of the Brooklyn frauds. Sandella profits were allegedly laundered through their business fronts. Among the faux companies was the Fort Solonga Management Group. Lou Sandella was also with Maxim Mortgage Bankers. At one point Maxim had the same address on Fort Solonga Road in Northport, Long Island as Regency Capital Funding. Regency was named in the EMC lawsuit against D&M. The suit identified Lou Sandella as branch manager for both D&M and Regency. Regency was the source for a number of alleged frauds in Queens and on Long Island.


The Alleged Group Grope

Sandella players were mortgage bankers and mortgage brokers, bank personnel, real estate attorneys, realtors, appraisers, etc. Some had the job of rounding up properties, sellers, and straw buyers. The latter were supplied with bank accounts temporarily pumped with Sandella cash and forged documents re income, assets and residence. Waiters with a few hundred bucks in the bank morphed into upscale restaurateurs. Modest and low income nabes were suddenly bursting with self-employed millionaires eager to assume huge mortgages. And why not? Even the values of burnt out shells or decrepit two families were ballooning thanks to the talents of Andy Perdikos and other Sandella appraisers. In 2004, Sandella attorney Gary S. Shaw expressed amazement at the half-a-mil appraisals Lou Sandella was getting in one area of Brooklyn. Saying “I know the neighborhood.” Lou replied “The last two years when we were doing so much business, we changed the whole market.”

After Sandella mortgage loans were sucked dry, they went into default. Banks and/or secondary mortgage market entities were left playing air loans. According to indictments and statements by the New York State Attorney General's office, institutions accessed included Accredited Home Lenders, Aegis Funding, BNC Bank, CitiBank, Credit Suisse, JP Morgan Chase, Lend America, North Fork Bank, and Washington Mutual Bank. Taxpayers got a taste of Sandella via home ownership and home rehab finance programs juiced by HUD and the FHA. Not all Sandella mortgages defaulted immediately. Some were used to help straw buyers qualify for more loans. At times, a second fraudulent mortgage would cover the fraudulent first. And so on and so forth…


End Games

In April 2006, several months before the related arrest of Toto Constant, eight central members of the Sandella Group were charged in an 83 count racketeering indictment delivered by the Office of the New York State Attorney General. Among those indicted were Louis Sandella, attorneys Garry Shaw and Ida D'Angelo, and Andy Perdikos. Handy Andy is now on the lam.

D&M Financial in Belleville is also gone. Albeit for a different reason. D&M filed for bankruptcy in February, 2007 and liquidated at the end of March. Attention civil suitors: barely enough money to pay a parking ticket was left in the Belleville coffers. Still, it's easy to imagine that D&M, like Celine Dion's heart, will go on. Who knows? D&M this, that, or the other may already be working their mortgage magic in some other belle ville.

According to the latest annual report on mortgage fraud by the Mortgage Asset Research Institute (MARI), New York was among the top ten states for the crime in 2006 and ranked 4th for rate of growth. Arizona, California, and New Jersey took top 3 in the latter category.

As for Emmanuel “Toto” Constant, his is a never-ending story. When Toto showed up for sentencing in State Supreme Court in Brooklyn on May 15th, speedy deportation appeared a done deal. Homeland Security said do it. State prosecutors chimed in. Even Toto was willing. He seemed to have lost his fear of returning to Haiti. Perhaps he believed ICE was right to cite Haiti's “increased judicial capacity” in the letter the agency sent State Supreme Court Justice Abraham G. Gerges. After all, Aristide is out of office and the various presidents and provisional leaders who've come and gone over the last dozen years had to be working on something. Or maybe Toto foolishly hoped to get a chance to slip out the back Jack, tourist visa in hand. Whatever. A swift deportation was not to be. Toto's old nemesis, the Center for Constitutional Rights, supplied Judge Gerges with the hefty history of FRAPH.

After reading the murder and torture tome, Judge Gerges nixed the plea deal and ordered a full trial for Toto on the grand larceny charges. A full delineation of Toto's larcenies will indeed be grand. Plenty of material is out there re his hammer time in Haiti, but the mainstream news team hasn't done any in-depth coverage of Toto's adventures in mortgage fraud land.

Oh– after learning that the Center for Constitutional Rights had raised objections to his deportation and Judge Gerges might take it off the table, Toto reverted to his fear of Haiti.

Carola Von Hoffmannstahl-Solomonoff
Mondo QT



Sources include but are not limited to:
The People of the State of New York v. Emmanuel Constant, Defendant, Memorandum, Supreme Court Kings County, Abraham Gerges, 05/22/07
Re: Emmanuel Constant, Todd J. Thurlow, Acting Chief Custody Determination Unit, U.S. Immigration and Customs Enforcement, 05/18/07
“Mortgage scam turns 40-year dream into a nightmare for Paterson family,” Heather Haddon, Herald News, 04/10/07
“New York Mortgage says accounting correction widens Q4 loss,” Reuters, 04/03/07
Superior Court of New Jersey, Appellate Division, Docket No. A-3339-05T23339-05T2, Morequity, Inc., Plaintiff-Responent, v. Charles Stanton et al and Lehman Brothers Bank, FSB, Defendant-Appellant, Decided 03/08/07, archived online by Rutgers School of Law–Camden
“‘Toto' pleads guilty in real estate fraud,” Craig Giammona, Times Ledger, 02/15/07
“New York: Former Haitian Strongman Pleads Guilty in Massive Mortgage Fraud Scheme,” New York Attorney General's Office, New York News, 02/08/07
“Haitian Death Squad Leader Ordered to Pay $19 Million to Torture Survivors,” Center for Justice and Accountability/Center for Constitutional Rights, 10/25/06
“Bad Loans draw bad blood,” Ruth Simon and Michael Hudson, Wall Street Journal, 10/09/06
“Six indicted in 'straw buyer' fraud scheme,” Inman News, 07/11/06
“Ex-Haiti military boss dogged by crime,” Knight Ridder/Tribune Business News, Newsday, Melville NY, 07/08/06
“Suffolk County Grand Jury Indicts Six for Roles in Real Estate Scam,” Press Release, Office of New York State Attorney General Eliot Spitzer, 07/07/06
“Roof falls in on 8M mortgage con,” Barbara Ross and William Sherman, Daily News, 04/26/06
“Eight indicted in massive mortgage fraud ring,” Press Release, Office of New York State Attorney General Eliot Spitzer, 04/25/06
The People of the State of New York against Louis Sandella, Michael Sandella, Kim Moss Fontanez, Andreas Perdikos, Danielle Moss, Geraldine Moss, Gary S. Shaw, and Ida D'Angelo, Supreme Court of the State of New York, County of Kings: Criminal Term, Attorney General Indictment No. 2899/2006
EMC Mortgage Corporation v. D&M Financial Corp., et al, Mortgage Fraud Blog, co-sponsored by Rachel Dollar and Interthinx, 04/18/05
Aurora Loan Services Inc, v. D&M Financial Corporation, Inc., Complaint and Jury Demand, United States District Court District of New Jersey, 12/29/04
United States District Court, Eastern District of New York, Elizabeth Cain, Roxanne Rosario, and Earl Alexis Rosario Cain against Sheila Bethea et al, Docket No. CV-04-3946
“7 Charged in Mortgage Fraud Scheme,” Mortgage Fraud Blog, co-sponsored by Rachel Dollar and Interthinx, 06/07/02
“Presence of Haitian fugitive splits immigrant community,” Munthit Ker, Columbia News Service, Columbia School of Journalism, 2000
*Some info in this section re Emmanuel Constant's activities in post Aristide Haiti comes from an interview Constant gave Ron Howell of New York Newsday in August, 2000, which appeared under the title “Haunted By Haiti Violence”.
**Man accused of Haitian abuses can stay in New York, Jonathon Karl, CNN World News, 08/08/97

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