(Adds comment from Kontogiannis's lawyer in the fourth
paragraph.)
DOW JONES NEWSWIRES
A New York real-estate developer pleaded guilty to defrauding
Washington Mutual, now part of J.P. Morgan Chase & Co. (JPM),
and a subsidiary of Credit Suisse Group (CS, CSGN.VX) as part of a
$92 million mortgage scheme, according to the U.S. Justice
Department.
Thomas Kontogiannis pleaded guilty to conspiracy to commit bank
and wire fraud in federal court in Brooklyn on Friday. The charges
were connected to two New York developments, one in Brooklyn and
one in Queens.
U.S. Attorney Loretta E. Lynch called the mortgage fraud
"staggering" in its scope. New York Superintendent of Banks Richard
H. Neiman said it was "one of the largest mortgage frauds directed
by a single individual."
Kontogiannis's attorney Gregory O'Connell said his client had
taken full responsibility for the matter and "expressed his sincere
remorse and hopes to put this difficult manner behind him."
He declined to comment on whether Kontogiannis was cooperating
with authorities in the case.
Kontogiannis is already currently serving a 97-month prison
sentence after pleading guilty in 2008 to money laundering.
Prosecutors had alleged Kontogiannis helped former U.S. Rep. Randy
"Duke" Cunningham to launder bribes.
Cunningham was sentenced to more than eight years in prison in
February 2008 after pleading guilty in 2005 to accepting $2.4
billion in bribes.
Kontogiannis's indictment said that he employed family and
workers who acted as straw buyers on properties he owned and
directed false loan files. The mortgages included false appraisals
and other documentation. After the loans closed, Kontogiannis
prevented the mortgages and deeds from being recorded, so he could
sell the same property repeatedly. He eventually sold the loans to
Washington Mutual or the Credit Suisse unit, DLJ Mortgage Capital
Inc., according to the charges.
Kontogiannis was indicted in June 2009, along with eight others.
His guilty plea is the fifth in the case.
He faces up to 30 years in prison for the conspiracy count. He
has also agreed to forfeit proceeds from the alleged fraud,
including a criminal forfeiture money judgment and money traceable
to four commercial properties he controlled worth at least $50
million.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com
(David Benoit contributed to this article.)