Merrick man pleads guilty in mortgage scam

The Nassau County man who was the alleged leader of a nearly $67-million mortgage fraud scheme faces up to 30 years in prison after admitting to conspiracy to commit wire fraud and bank fraud, prosecutors said this week.

Gerard Canino, 51, of Merrick, who pleaded guilty in U.S. District Court in Manhattan Monday, is due to be sentenced in September, prosecutors and his lawyer said.

As prosecutors described the alleged scheme, Canino, as owner of First Class Equities, a mortgage brokerage with offices in Oceanside and Old Westbury, led a conspiracy that used straw buyers to obtain mortgages to buy distressed homes. The straw buyers, including the conspirators, their family and friends, were often paid for their role, prosecutors said.

Prosecutors also said that loan officers at Canino's company -- also known as Thunder Funding and Mutual Capital -- submitted mortgage applications with bogus details about the buyers' finances and jobs, while attorneys filed false closing statements with lenders and then distributed the cash to the conspirators.

The five-year scheme came to an end in 2009.

"Gerard Canino should have promoted responsible homeownership and protected the integrity of the mortgage finance industry," Manhattan U.S. Attorney Preet Bharara said in a statement. "Instead, he used his firm to commit a massive mortgage fraud scheme that left scores of foreclosed properties in its wake."

More than 100 homes were involved in the scam, according to the indictment.

Ultimately, the homes were repossessed by the banks, but by then the properties had lost much of their value due to the housing meltdown, said Canino's attorney, Stuart Kaplan. The lenders included Bank of America, Chase and Citibank, Kaplan said.

Canino "is very remorseful and certainly very regretful that he engaged in this course of action," Kaplan said. "He not only put himself in a desperate situation, but he realizes now the magnitude of the loss and harm he's done to his family and friends and the people who loved him the most."

The plea agreement calls for Canino to pay a fine of up to $1 million, forfeit the $66.6 million proceeds of the scam and pay $21.8 million in restitution. However, Kaplan said, "at this point I think he will be hard pressed to make any restitution. He's had to file for Medicaid, and he's actually on food stamps right now."

Canino's home is in foreclosure, Kaplan said, and Canino is living in Roslyn.

Nine other Long Islanders -- including three lawyers and another who was disbarred -- have been charged in the scheme, along with four other people from Queens, Armonk, Newark and Texas. Their trial is due to begin in July, prosecutors said.