Financial Fraud: Naum Morgovsky Arraigned For Scheme to Defraud Two Federally-Insured Banks
Portola Valley And Hillsborough Residents Charged In Bank Fraud Scheme
SAN FRANCISCO – Naum Morgovsky was arraigned in federal court today for his alleged role in a scheme to defraud two federally-insured banks through short sales of two rental properties in Hawaii, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The arraignment took place in San Francisco before the Honorable Sallie Kim, U.S. Magistrate Judge, and follows an indictment handed down by a federal grand jury on September 29, 2016, charging Morgovsky and his co-defendant, Mark Migdal, with conspiring to commit the alleged crimes.
According to the indictment, between June 2009 and July 2016, Morgovsky, 67, of Hillsborough, and Migdal, 71, of Portola Valley, conspired to defraud two federally-insured banks, now Bank of America and EverBank, by seeking the banks’ approval for short sales of two condominiums. A short sale is a sale in which a lender allows a property to be sold at a price less than the amount owed on the loan. The indictment alleges that in 2006, Migdal purchased condominiums in a development in Kihei, Maui. The defendants then sought the banks’ approval of the short sales in the same development in which Migdal owned the other properties. According to the indictment, Morgovsky and Midgal conspired to convince the banks to allow the properties to be sold to a person who was deceased, but whose identity was used to conceal the true identity of the purchaser. The conspiracy also allegedly involved submission of false statements to the bank about Midgal’s employment status and income. After the banks approved the short sales in 2009 and 2010, Migdal continued to treat the property as his own, including collecting rent and paying taxes and homeowners’ association dues. The properties were transferred to Migdal’s wife in April 2016.
On August 24, 2016, the United States Attorney’s Office for the Northern District of California filed a complaint against Morgovsky alleging he committed bank fraud. The indictment adds Migdal as a defendant and charges Morgovsky and Migdal each with two counts of bank fraud, in violation of 18 U.S.C. § 1344, and one count of conspiracy, in violation of 18 U.S.C. § 1349. The indictment also seeks forfeiture of the two Hawaii properties. Morgovsky made his initial appearance on August 26, 2016. He remains released from custody on a $1 million bond. Morgovsky’s next appearance is scheduled for October 4, 2014 before the Honorable Vince Chhabria, U.S. District Judge, for a status conference. Migdal is scheduled to make his initial appearance on October 3, 2016, in San Francisco.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of thirty years in prison and a fine of $1,000,000 for each count of bank fraud and conspiracy. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys John Hemann, Ila Deiss, and Colin Sampson are prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation.