LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, and JOSEPH M. DEMAREST, JR.,
the Assistant Director-in-Charge of the New York Field Office of
the Federal Bureau of Investigation (“FBI”), announced today the
arrest of HUGH ZUBER — a lawyer employed by the Office of the
Corporation Counsel for the City of New York — for fraud,
including mortgage fraud, in connection with the purchase and
sale of two buildings, and for forging the signature of a
bankruptcy judge on a false bankruptcy court order concerning one
of the purchases.
According to the criminal Complaint unsealed today in
Manhattan federal court:
In April 2006, a property owner in the Bronx retained
ZUBER to represent him in the sale of a building. ZUBER arranged
the sale of the property to Alana Property Management LLC for
$950,000 — but did not disclose to his client that he had
created Alana Property, and that his sister managed the company.
At ZUBER’s urging, his client agreed to sell the property to
Alana Property for $400,000 in cash and a $550,000 ten-year note,
purportedly secured by a mortgage, that ZUBER’s client issued
directly to Alana. Alana Property then financed the February
2007 purchase of the property in part via a $705,000 mortgage
which it obtained based on a loan application that omitted
material facts regarding the transaction. Alana Property
diverted a portion of those loan proceeds for its own, unrelated
purposes, and provided only approximately $400,000 to ZUBER’s
client. After the closing, ZUBER made payments for some months
on both the mortgage and the note. When ZUBER and Alana Property
failed to make payments additional on the note, ZUBER, among
other things, presented to the client documents relating to a
lawsuit he had purportedly filed against Alana Property in New
York State court, and a May 2008 “Order Confirming Plan” that had
purportedly been issued in bankruptcy proceedings involving Alana
Property. There were in fact no such proceedings in New York
State or federal bankruptcy court.
In 2006, ZUBER represented a Spring Valley, New York,
property owner in the sale of a house to an individual for
$625,000. ZUBER did not disclose to his client that he had a
business relationship with the purchaser. At ZUBER’s urging, his
client agreed to sell the property to the purchaser for $425,000
in cash and a $200,000 ten-year note, purportedly secured by a
mortgage, that ZUBER’s client issued directly to the purchaser.
The purchaser then funded the transaction in part via a $500,000
mortgage obtained via a loan application that omitted material
facts regarding the transaction. Following the July 2007 closing
ZUBER made payments for some months on both the mortgage and on
the note. When payments on the note ceased and the seller
advised the purchaser that he was in default, the purchaser
denied that he had issued a mortgage to the seller. ZUBER then
told his client that he had “messed up” and that he would try to
make it up to the client, but failed to do so.
ZUBER, 38, of Monsey, New York, was charged with one
count of conspiring to commit wire and mail fraud, and one count
of forging a judicial signature. The conspiracy charge carries a
maximum sentence of 20 years in prison and a fine of $250,000 or
twice the gross gain or loss from the offense. The forged
judicial signature charge carries a maximum sentence of 5 years
in prison and a fine of $250,000 or twice the gross gain or loss
from the offense. ZUBER is expected to be presented later today
before United States Magistrate Judge THEODORE H. KATZ, in
Manhattan federal court.
Mr. DASSIN praised the FBI for its outstanding work in
the investigation. He also thanked the Bronx District Attorney’s
Office for referring the investigation to the United States
Attorney’s Office, and thanked the Rockland County District
Attorney’s Office and the New York City Department of
Investigation for their assistance.
Assistant United States Attorney MARK D. LANPHER is in
charge of the prosecution.
The charges contained in the Complaint are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.