Mortgage fraud's impact in CH may be worse due to city's effort to help FBI

Thirty-six-year-old Uri Gofman, of Beachwood, was indicted last summer by a Cuyahoga County Grand Jury "in a conspiracy that prosecutors say involved 453 homes in Cuyahoga County and $44 million in fraudulent loans," according to a report at the time by The Plain Dealer.

Now, a more recent report by WKYC-TV3, indicates that for roughly three years before the indictment, Gofman was getting help from Cleveland Heights Housing Manager Rick Wagner – exacerbating the impact of Gofman's alleged mortgage fraud to the city and its residents.

According to the WKYC-TV3 report, Wagner isn't accused of doing anything illegal; he claims he was helping the FBI in its investigation of Gofman. But in so doing, he allowed Gofman to purchase more homes here than otherwise would have been possible. The FBI didn't comment.

Here, according to the report by WKYC investigative reporter Tom Meyer is what happened:

Beginning in 2006, Wagner "waived escrow requirements for Gofman on nearly two dozen homes" Meyer wrote. Typically, when a home is sold in Cleveland Heights, housing code violations must be fixed by the seller and inspected before the property transfer takes place.

Alternatively, money to fix the violations needs to be put into an escrow account to assure that someone – whether the buyer or seller – makes the repairs.

Anyone who has bought or sold a home in the city knows the Cleveland Heights Housing Department is a stickler for details in this process.

Yet Gofman merely had to "fax over bank statements, proving he had money to fix them up," Meyer's report says. He never actually placed that money into escrow accounts.

Meyer quotes Gofman as saying the waivers let him buy "significantly more homes than (he) could have done otherwise" because his money wasn't actually tied up in escrow.

The result was that people who bought homes found may have found they didn't have money that was promised to do required repairs. Because so many of the properties with which Gofman was involved have since gone into foreclosure, the result in Cleveland Heights is more houses are either in foreclosure or have never been repaired as required at the time of the sale – or both.

For his part, Wagner is quoted as saying he was simply doing his job. He claims, in the WKYC report, that city law requires escrow to be waived if the seller demonstrates sufficient funding for repairs. Further, when at least one home buyer brought the missing repair money to his attention in early 2007, Wagner reportedly told her to do nothing and to keep quiet so as not to harm the FBI investigation.

In the comments posted online about the WKYC report, someone calling himself Tony Viola writes:

"I have been a real estate agent for 15 years and I live in Cleveland Heights and I had never heard of escrow "waivers" ... it's not on the city web site, so if Mr. Wagner offers that to anyone, he should offer it to EVERYONE! Finally, a close review of the statute makes clear that funds need to be in 'escrow' accounts, not checking accounts that can be closed or have funds taken from without the city's knowledge!"

An important point about Viola: According to The Plain Dealer article cited at the beginning of this report, Viola's Realty Corp. of America was the selling agent for nearly half of the 453 homes involved in the alleged mortgage fraud, and Viola was also charged in the same grand jury indictment. Viola maintains his innocence at a Web site called TonyToldMeToDoIt.com. 

Note: The author and the Heights Observer have not done original reporting in this article. The information is provided because of its relevance to Cleveland Heights residents; we urge you to read the original articles, linked in the text above, from which this information was gleaned.