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REAL ESTATE SETTLEMENT OFFICER AND ATTORNEY IN BALTIMORE CONVICTED IN CONSPIRACY TO MISUSE AS MUCH AS $350,000 IN HUD FUNDS
WASHINGTON - A settlement officer and a former attorney with ties to the John Baumgarten Co. home improvement firm in Baltimore have been successfully prosecuted for participation in a conspiracy to misuse as much as $350,000 in Department of Housing and Urban Development funds.
"HUD has zero tolerance for waste, fraud, and abuse," Secretary Andrew Cuomo said. "We are moving aggressively against anyone who tries to improperly collect HUD funds."
The two people convicted in the case, which was prosecuted by the U.S. Attorney's Office in Baltimore, are:
Many of Lori Askins Baumgarten's clients received funds through HUD's 203(k) home rehabilitation program, which makes loans to finance the purchase and repair of older homes. However, instead of making repairs, some of Ms. Baumgarten's buyers actually used the money to purchase other homes. The loss to the Deutsch and Towarnicky law firm is estimated at over $200,000, and the loss to HUD is estimated at a potential $350,000.
Ms. Baumgarten allegedly assisted Rollman in processing loans for 14 different properties he purchased under HUD's 203(k) program. He put the properties in his wife's name using false information to qualify for the loans.
The investigation, conducted by HUD's Office of Inspector General, the FBI, Drug Enforcement Administration, and the Internal Revenue Service, was conducted as part of the white collar crime focus of the Operation Safe Home initiative that was created in 1994 to attack crime in public and assisted housing.
In addition to combating fraud in publicly funded housing, Safe Home has been responsible for executing more than 1,900 search warrants and making more than 15,600 arrests. Operation Safe Home has seized more than $29 million worth of illegal drugs, more than 2,100 weapons, and over $4.6 million in drug money.
Under this initiative HUD works along with the Justice Department, Treasury Department and the Office of National Drug Control Policy in cooperation with state and local law enforcement agencies and public housing authorities.
In addition, Cuomo launched a "Get Tough" initiative to crack down on waste, fraud, and abuse in HUD programs in March 1997 in partnership with the Justice Department.
A recent report on HUD's Get Tough Initiative found that:
Content Archived: January 20, 2009