Feds: Mortgage brokers swindled homeowners

Two Bethpage mortgage brokers were arrested by FBI agents Thursday on charges of swindling 14 Long Islanders out of a total of $1.5 million in a scheme that also could have cost them their homes.

John Rutigliano, 44, of Bethpage, and Kenneth Kiefer, 46, of Medford, owners of Empire Property Solutions in Bethpage, were charged with fraud in a scheme that took advantage of homeowners seeking to refinance their homes or who were having difficulty making mortgage payments, said Assistant U.S. Attorney Christopher Ott.

Rutigliano and Kiefer are accused of convincing the homeowners that they could get a better deal if they signed over the home title to purchasers for one year, stopped payments on their mortgages and paid rent to the "temporary" new owners while more favorable mortgage financing was worked out, according to Ott and court documents.

The supposed new owners were straw buyers working with Rutigliano and Kiefer, the documents said. The two took out new mortgages on the homes at inflated values, drained the equity on the properties and pocketed the "rent" money, Ott said. The homeowners discovered the scheme when they got notices from mortgage lenders about failure to make mortgage payments or got eviction notices or tried to get the title back to their homes.

"This is worse than somebody getting mugged," said Arshad Majid, a Hauppauge attorney who represents two of the victims, one from Glen Head and the other from Wading River. "At least after a mugging you have a home to go to." It was unclear whether any homeowners lost their house. Majid said the New York State attorney general's office had obtained an injunction to prevent his clients from losing their homes. The victims' names were not released.

Rutigliano's attorney, Randi Chavis, declined to comment, as did Kiefer's, Austin Manghan. The two were arraigned before U.S. Magistrate E. Thomas Boyle in Central Islip. He released them each on $250,000 bond.