Federal authorities have criminally indicted Rochester-based real estate mogul Robert Morgan, adding him to a list of similarly accused officials of Morgan’s multimillion-dollar real estate empire and officials of a Buffalo-based mortgage brokerage.
Prosecutors claim the group, led by Morgan, is guilty of a massive real estate fraud.
Handed up in the federal court for the Western District of New York, the indictment claims Morgan and his alleged confederates inflated property values of Morgan-owned apartment complexes in order to obtain loans from various lenders far in excess of what the properties would actually secure.
Felony charges against Morgan include multiple counts of bank and wire fraud, money laundering, and conspiracy to commit bank and wire fraud.
His case is being handed off from Rochester-based U.S. District Judge Elizabeth Wolford to a judge in Buffalo, where others involved in the alleged fraud have been charged.
Morgan’s real estate empire extends to 14 states and includes 92 New York apartment complexes. Commercial properties he owns or has partnered with locally include Tower280 and the Lincoln Alliance Building in downtown Rochester. A mixed-use property Morgan had planned to develop on the former Inner Loop site in Rochester’s trendy East End was scotched after the widening scandal loomed larger for the developer.
The indictment caps an investigation that began months ago with the targeting of Morgan’s son and nephew, Todd Morgan and Kevin Morgan, along with Aurora Capital Advisors LLC officials Frank Giacobbe and Patrick Ogiony, the principal owner and managing director of the Buffalo-based commercial mortgage brokerage, respectively. The handing up of the May 22 indictment consummates a grand jury probe that began in November 2018. Also named in the new indictment were Todd, Morgan, Giacobbe and Michael Tremiti, former director of finance at Morgan’s management company.
Plagued by the federal criminal probe, Robert Morgan bowed out of his business some months ago, turning the company over to former Morgan Management chief operating officer Scott Cresswell, who started a new firm, Grand Atlas Property Management.
Cresswell said Atlas retained no ties to Morgan’s real estate empire. Earlier this month, however, Cresswell pleaded guilty, admitting to crimes he committed as a Morgan Management official and implicating Morgan.
Prosecutors claim Morgan enlisted employees, the Buffalo mortgage brokers and an unnamed and unindicted real estate lawyer, as partners in schemes to fraudulently obtain inflated valuations totaling many millions of dollars for rental properties, and used the wildly overstated valuations to get bank loans far in excess of what banks otherwise would have loaned the developer. Many of those under-collateralized loans ended up in the portfolios of the federal loan guarantors Fannie Mae and Freddie Mac, court papers note.
Ploys Morgan and his alleged confederates are accused of having used include staging empty apartments to make it appear as if they were rented to tenants and arranging fake rent payments by employees of contractors working for Morgan’s companies. After booking the fake rent checks, Morgan’s company repaid the contractors, prosecutors claim.
Morgan’s indictment throws into new light what had been an archetypally American success story of adversity overcome. Having nurtured an ambition to build a residential real estate empire while still a teenager, Morgan started acquiring properties after graduating from high school in the 1970s and over the next 15 years steadily added to his portfolio. The real estate business was a part-time endeavor for the young entrepreneur, however. He plowed profits back into his budding real estate empire and worked in his parents’ Rochester fish market to support his young family.
Tending the counter in the Plymouth Avenue seafood store in 1991, Morgan was shot in the back by a robber. The bullet severed his spine, turning him into a wheelchair-bound paraplegic at the age of 33. He sold the family business and turned his attention to real estate.
After the collapse of the U.S. real estate market in 2008, Morgan saw roughly $100 million worth of properties including mobile home and RV parks in several states taken over by lenders in foreclosure actions. The seemingly stunning loss did not destroy his business but enabled him to focus more on Rochester-area developments, he said in a 2016 interview.
Authorities now are seeking $267.3 million from Morgan and others involved in the alleged scheme, the indictment shows. To secure the forfeited amount, the feds have put liens on various Morgan-owned properties including multifamily apartment complexes in Monroe and Ontario counties, the Buffalo and Syracuse areas and in Pennsylvania.