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CUOMO CONTINUES CRACKDOWN ON WASTE, FRAUD AND ABUSE IN ACTION AGAINST NEW YORK CITY LENDER
WASHINGTON - Housing and Urban Development Secretary Andrew Cuomo today announced that HUD has begun debarment action against George A. Sophocleous, the former president and part-owner of a New York City mortgage company accused of improper lending practices. The proposed debarment seeks to prevent Sophocleous from doing new business with federal agencies for three years.
Sophocleous - who lives in Glen Cove, NY - is the former president of Olympic Home Mortgage Company in the New York City borough of Queens. The firm later was purchased by a new owner, who changed its name to InterAmerican Mortgage Corporation.
Today's announcement follows an agreement HUD reached last summer with InterAmerican's new owners under which the company agreed to pay up to $2 million to HUD to settle improper lending accusations that were made against the company while it was headed by Sophocleous.
Beatrice Sukhdeo, who worked for Sophocleous as a loan officer, was debarred by HUD last year for three years for her involvement in the improper lending practices.
"These actions are part of HUD's continuing crackdown on waste, fraud and abuse," Cuomo said. "HUD's days as a mugging victim are over. Anyone who tries to rip off this Department will be caught and punished to the full extent the law allows."
Sukhdeo was accused of participating in a scheme to falsify information about the income, assets and downpayments of homebuyers so the homebuyers could qualify for larger home mortgage loans than they could afford. Sophocleous, who supervised Sukhdeo, allegedly was aware of her misconduct and failed to notify HUD.
HUD became involved because the mortgages were insured by HUD's Federal Housing Administration. When 19 FHA-insured mortgages that were issued based on false information defaulted, FHA was required to pay off the loans at a cost of about $1 million.
The debarment action against Sophocleous to deny him new federal contracts for three years would deprive him of an important source of income for many businesses. Sophocleous has requested a hearing by a HUD Administrative Law Judge to contest the proposed debarment.
Cuomo launched the "Get Tough" initiative to crack down of waste, fraud, and abuse in HUD programs in March, 1997 in partnership the Justice Department.
A recent report on HUD's Get Tough Initiative found that:
Content Archived: January 20, 2009