Affordable Housing defendants pursue dismissal

By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com

Two defendants in a mortgage fraud scandal are seeking dismissal of charges in their federal court case.

Attorneys for Anthony J. Staph Jr. and Nicholas DeRosa filed motions Monday with U.S. District Judge Gustave Diamond in Pittsburgh.

To date, federal prosecutors have charged five Lawrence County residents in the government’s investigation of a defunct nonprofit housing agency. The alleged conspiracy involved Affordable Housing of Lawrence County, which was formed in 2003 as a spin-off agency of the Lawrence County Housing Authority.

The U.S. Attorney’s Office accused DeRosa, of 221 N. Cascade St., and Robert Ratkovich, of 512 Norwood Ave., with defrauding First Commonwealth Bank of $250,000. The alleged plot involved the purchase of seven properties at inflated prices on behalf of Affordable Housing.

DeRosa faces one count of bank fraud, two counts of mail fraud and one count of money laundering conspiracy. He is a retired New Castle Area School District administrator and former city councilman.

Ratkovich pleaded guilty in July to one count of bank and mail fraud conspiracy and one count of money laundering conspiracy. The former housing authority supervisor and city councilman is scheduled to be sentenced April 28.

Staph, a real estate appraiser, was indicted on one count of bank fraud.

Thomas J. Farrell, who represents the Neshannock Township resident, asked the court to dismiss the charge involving his client.

“(First Commonwealth Bank) selected and paid Mr. Staph to do the appraisals, after the sales agreements were signed and after the sales prices set,” Farrell stated in court documents. “There will be no evidence that Mr. Staph received any benefit from Mr. DeRosa or Mr. Ratkovich for appraising the properties at any particular value.”

He added the government never indicated Staph played a role in selecting the properties Affordable Housing bought.

“There is no suggestion that either DeRosa or Ratkovich had any communications whatsoever with Mr. Staph about their scheme or the appraisals.”

Farrell said Staph’s work was limited to evaluating the properties during a two-week period in November 2005.

The government alleged Staph overvalued the appraisals.

If Staph’s dismissal is denied, Farrell wants the court to separate his client’s case from that of DeRosa’s. The government is trying the pair as part of one case.

Efrem M. Grail, DeRosa’s legal counsel, is requesting the dismissal of the money laundering conspiracy charge.

In his motion, Grail said the conspiracy allegation has no bearing on the bank and mail fraud charges. The latter counts involve Affordable Housing and funds from First Commonwealth, while the money laundering charge involves an alleged kickback scheme with money obtained from another source.

The counts, Grail says, were improperly joined — known as duplicity — and could damage DeRosa’s defense.

“Such a duplicitous count in an indictment charging multiple crimes must be dismissed,” Grail wrote.

If his argument is rejected, he asked that the bank and mail fraud charges be tried separately from the money laundering count.

Diamond told the government to respond to the defendants’ motions by April 9.

The mortgage fraud investigation has produced charges separate but related to the Affordable Housing case.

Former county treasurer, Gary F. Felasco, pleaded guilty in September to one count of failure to file a 2005 federal tax return.

According to government documents, Felasco underreported his income by $10,000. He earned $44,568 as county treasurer in 2005 and also collected $35,000 as the result of illegal activity related to Affordable Housing.

Felasco was sentenced to three years probation and ordered to pay back taxes, penalties and interest to the Internal Revenue Service.

Michael Trover, of 609 E. Long Ave., was indicted in November on one count of lying to a federal grand jury. Pretrial motions in his case are due by April 20.