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Thread: Buffalo landlord pleads guilty in mortgage fraud probe

  1. #1
    Member steven's Avatar
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    Buffalo landlord pleads guilty in mortgage fraud probe

    A Buffalo landlord will pay after pleading guilty to multiple felony counts in a mortgage fraud scam, the state Attorney General's office said Thursday.

    Robert Palano, 51, faces two-and-one-half to seven years in prison on the felony counts. The former Clarence resident, now living in Florida, has under a civil action, also agreed to pay $1.5 million in restitution and penalties.

    Additionally, Michael Heigel, who worked as an appraiser on more than 100 properties purchased on Buffalo's East Side, will pay $55,000 for over-inflating the value of those homes, many of which ended up vacant and boarded up in a depressed area of the city.

    http://www.bizjournals.com/buffalo/s...l?surround=lfn
    “if you’ve got health insurance, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”
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    Maybe there'll even be justice for St. Frank Parlato some day.
    Truth springs from argument among friends.

  3. #3
    Tony Fracasso - Admin
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    Quote Originally Posted by biker
    Maybe there'll even be justice for St. Frank Parlato some day.

    Biker? Why are we picking on Parlato? Details?

  4. #4
    Member steven's Avatar
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    I think the name alone requires no further comment
    “if you’ve got health insurance, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”
    Barrack Obama

  5. #5
    Tony Fracasso - Admin
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    Steven I really don't know the name. That's why I asked.

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    Member steven's Avatar
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    Here is some stuff off Kern watch on Frank

    FRANK R. PARLATO JR'S METHOD OF OPERATION
    STEP 1 - THE PURCHASE: Frank R. Parlato Jr. scours the real estate listings in search ofhomes to purchase. He usually searches in neighborhoods that are beginning to experience declining property values, increased rates of crime, and a dwindling sense of community. These neighborhoods are beginning to worsen, but are not totally undesirable, yet. Properties for sale in these neighborhoods are for the most part owned by the elderly. These elderly individuals are usually looking to relocate to the suburbs, to escape the blight and decline that appears to be inevitable for their neighborhood. Unfortunately, they are willing to sell their homes for only a fraction ofwhat they should receive. Parlato offers to purchase their homes for an extremely deflated price and in desperation they accept.

    STEP 2 - MARKETING THE PROPERTY: For the most part, Frank R. Parlato Jr. doesn't do much to prepare the property for resale. The homes he buys are usually in acceptable condition, with some exceptions. The homes may need a couple ofrepairs, but Parlato usually chooses not to perform these repairs. The only improvements that Parlato usually performs is the addition of some fresh paint or maybe a new carpet. These types ofimprovements are visually pleasing and give the prospective buyer a feeling that the home is in decent condition. Repairing the plumbing or electrical system in the home doesn't make sense to Parlato, because these repairs go virtually unnoticed at the time of sale. After Parlato has completed the minimal preparation of the home to make it visually presentable, it is ready for sale. Parlato runs an ad in the Buffalo News classified section that advertises a home, "Rent to Own". Each home is listed according to location, such as "East Side", "Lovejoy", or "Cheektowaga", to name a few. After each listing, there is a dollar amount representing what the perspective buyer can expect to pay each month. These figures can range from $300.00 to $600.00. On occasion, Parlato places a "Rent to Own" sign in front ofthe property as well.

    STEP 3 - THE SALE: Individuals begin to contact Parlato's real estate office about the properties advertised. Frank R. Parlato Jr. himself or a representative of his company show the perspective buyer a home from Parlato's current stock. The first home that Parlato shows to the perspective buyer is not always the home that the individual will end up purchasing. The original home displayed is an above average Parlato home that he may keep in his possession for a while to entice prospective buyers into doing business with him. After a prospective buyer appears to show some enthusiasm about doing business with him and is excited about becoming a homeowner, Parlato breaks the news to the prospective buyer that they cannot afford the home that was originally showed to them. Parlato then reassures the customer that he will find them a home that is more suited to their price range. Parlato then shows the customer a home with less value and appeal, possibly in a more deteriorated neighborhood of the city. But the customer usually accepts this second home, because they are already excited about the prospect of home ownership. After the customer makes the decision to purchase the home, Parlato begins to "herd" his customers through the home buying process.

    STEP 4 - PROCESSING THE SALE: Parlato works with and refers his customers to certain mortgage lenders on a regular basis. For the most part, Parlato customers are automatically approved for a mortgage with these lenders. In some cases, it is only necessary for the customer to go to the lender's office to sign the proper paperwork. Ifa formal application is necessary and the customer has credit problems, Parlato offers to help the customer clear up the credit problems. He usually accomplishes this by offering to pay off any debts that the customer may have. Very often though, these customers do not have the financial means to successfUlly hold a mortgage and a short time after purchasing the home, they find themselves in poor financial condition once again. Lending institutions such as Countrywide and The United Bank of Texas enjoy dealing with Parlato's real estate company because he brings them volume business and because the mortgages are guaranteed by the U.S. Department ofHousing and Urban Development. There is virtually no risk to the mortgage lender since the federal govemment guarantees the mortgage. If the homeowner defaults on the mortgage, the federal government will suffer the financial consequences. Furthermore, the federal govemment doesn't send out their own real estate appraiser to determine the value of a property before it guarantees the mortgage, because it is no longer required to as a result of deregulation. The federal government accepts the appraisal of an outside real estate appraiser hand picked by Parlato. As a result, Parlato can ask an absurd price for a home as long as he has his licensed appraiser back him up. After the customer has obtained their mortgage, it is time to close on the property. Parlato may "help" his customer once again by providing a closing attorney for them. Parlato's acquaintance, Russell Perla is an attorney that has been known to provide legal representation for Parlato's customers at closing time. It is unfortunate that these home buyers go into the closing session with legal representation that may have the sellers best interests in mind instead of theirs.

    STEP 5 - HOME OWNERSHIP: Many of those that have purchased homes from Parlato, find that home ownership is not as easy and inexpensive as they originally thought. First, the homes that Parlato sold to them have begun to deteriorate fast and are in need of major and expensive repair. Now these homeowners may have to pay a contractor to make repairs to their home, that they cannot afford. Many ofthese homeowners have no choice but to go without the necessary repair. Some ofthem call Parlato's office hoping to get some action, but the most they may ever receive is a visit from an unqualified repairman that makes the problem worse. Second, many of Parlato's customers begin to experience trouble making their monthly mortgage payment. It was explained to most of Parlato's customers that their mortgage was a fixed rate mortgage. However, in some cases the monthly mortgage payment has increased as controlling interest in the mortgage has changed hands. This makes it very difficult for these homeowners to budget their money effectively. In other cases, the customers that Parlato helped obtain mortgages never had the financial resources to be homeowners in the first place. As a result, many of these properties are foreclosed on by the mortgage lender, who in turn puts a claim in to the U.S. Department of Housing and Urban Development for the amount of the unsatisfied mortgage, plus interest and penalties. In the end, the people with the dream of home ownership no longer own their homes and their credit rating is worse then ever. Furthermore, the U.S. government pays an over inflated price for an unwanted piece ofproperty, in a deteriorating neighborhood. For an undetennined amount of years after that, taxpayers will pay to maintain and inevitably demolish the home.

    http://www.kernwatch.com/housingvalu...to.html#method
    “if you’ve got health insurance, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”
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  7. #7
    Member buffy's Avatar
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    as Curm said "let me be frank..."

    Frank Parlato has been mentioned before on this MB, check this thread:

    http://forums.speakupwny.com/showthr...hlight=parloto

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    Tony Fracasso - Admin
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    Wow, how about that.

    People like that ruin the fabric of the community plus stick a community member in the arse at the same time.

    He's a question for the BMHA'ers in the know. Could BMHA money be used to recondition homes in communities in mass scale? I dont mean a group ran by a bunch if idiots like we normally see supplied by our local governments.

    I mean by people that are acutally making a difference in the communities in WNY.

  9. #9
    moonshine
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    This response might sound like a defense of Frank, but it isn't. Anyone, I repeat ANYONE, can do the same thing Frank did if they know their P's and Q's. It's a really simple form of fraud. I could easily pull it off tomorrow if I was feeling especially slimy.

    The underlying reason why these mortgage frauds are committed is because the FED backs the loans. Mortgage brokers write the loans, some lender signs the papers, and the loan is packaged and backed by her majesty "Ginnie Mae".

    http://www.ginniemae.gov/
    http://www.investopedia.com/terms/g/ginniemae.asp

    Lenders wouldn't make these types of loans if they didn't have a way to get rid of them. Eliminating Ginnie Mae would be a good start. What business does the government have in the mortgage industry anyway? Take away the safety-net and lenders will insist on naming their own appraiser, thereby eliminating the inflated appraisals.

    Frank might be the posterboy for mortgage fraud, but the ability to pin the burden on the taxpayer via Ginnie Mae is the real problem.

  10. #10
    moonshine
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    Ok, cracked another beer, so I'll continue...

    HUD has to go! Many government agencies are in the front-running for the prize of "Most Corrupt", but HUD is a real gem. They enable guys like Frank.



    (Thanks to Jim for the pic)

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    Quote Originally Posted by WNYresident
    Biker? Why are we picking on Parlato? Details?
    During the 80's and 90's, Frank was the mastermind of a scam to put poor folks in crappy homes financed by HUD mortgages. Most defaulted and they make up a significant percentage of the abandoned property on the East Side.

    This is Frank Jr. Poppa was a realtor with offices on Main St by the old Mercedes dealership.

    Frank's main operative was a guy named Robin.

    Frank's MO was to buy a distressed property, after negotiating the price down several times with a desparate seller ("I'll take anything was his indication that he was halfway through the four month closing process). Slap a coat of paint on it and toss any garbage into the yard of the (maybe) abandoned house next door.

    Getting HUD financing was key. Money in hand. HUD happy to have all those po' folk gittin houses.

    But Frank also had a keen marketing sense. He'd resurface every five to seven years. Long enough for the last cub reporter at The News to have moved on to a more prestigious paper (the Kansas Topekan). Then St. Frank charms the next one. And you soon had another breathless story: "There's this really, really cool guy. Fixing up houses on the East Side. And providing them to poor folk on the East Side. He used to be a Bhuddist Monk. Or at least a seminarian. A really, really cool guy.

    He ran this scam three times over fifteen years. Till HUD refused to make loans on any property with which St. Frank was associated.

    Is he up to his old tricks again?
    Does Joe Illuzi love him?
    Is that hole in Niagara Falls still a hole? Despite TV reports that he was filling it in?

    That's "the details"
    Truth springs from argument among friends.

  12. #12
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    Ok, I hadn't read what Steven posted.

    His is factual.

    Mine gives the interesting twist about how St. Frank played The News. Several times.

    And he's still doing it.

    Remember the TV reports last year about how "millionaire Buffalo developer Frank Parlato Jr." was going to fix that huge hole next to the Oxy Center in The Falls?

    Hole is still there.

    Chances Channel 2 will revisit it and show how completely they were duped?

    NONE
    Truth springs from argument among friends.

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    The more colorful parts of his scam made hide even more layers of evil.

    He cleans out the house and overgrown back yard by throwing everything into the yard next door. Not only does this cut his costs to the bone, but it may set up the house next door as the next Parlato project.

    I've never heard whether St. Frank bids on his own former properties when HUD forcloses. Maybe he's furn the same scam on the same piece of property several times.
    Truth springs from argument among friends.

  14. #14
    Member Linda_D's Avatar
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    I'm not going to disagree with anything anybody's said about Frank Sr or Jr because even if it's not the exact truth, it's close enough, but the original article talked about a Robert Parlano. Is this a misprint, a Parlato clone (or alias) or simply another scammer with a similar name? Does anyone know?
    Your right to buy a military weapon without hindrance, delay or training cannot trump Daniel Barden’s right to see his eighth birthday. -- Jim Himes

  15. #15
    Tony Fracasso - Admin
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    Chances Channel 2 will revisit it and show how completely they were duped?
    Can we get channel 4 to do a story on how channel 2 got duped? We'll give them like blue coats so they contrast against the red ones

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