Two real estate developers are facing up to 20 years in prison each for defrauding investors of more than $27 million in a mortgage scheme. They were arrested and charged in U.S. District Court today.
Michael Hershkowitz and Ivy Woolf-Turk, both 51, convinced over 70 investors to fund the renovation of multi-family apartment houses in upper Manhattan that would be made available for sale or rental at much higher prices or would be refinanced, by promising to provide them with first mortgage interest on various properties in the 16 buildings as collateral within three years.
The investors were enticed by the promise of above market rates interest within 18 months to three years, by Hershkowitz and Woolf-Turk.
The only problem was that the collateral didn’t exist; the investors had no stake in anything and the investors were never paid for the $27 million they were convinced to fork over to Hershkowitz and Woolf-Turk between September 2003 and March 2007. Hershkowitz and Woolf-Turk fabricated documents to some investors to convince them that the collateral was real. They also borrowed $51 million from financial companies during the same period, but the August 13th complaint only included charges related to the $27 million.