DeRosa to change fraud plea

Oct. 27, 2010

By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com

Nicholas DeRosa, a key figure in the Affordable Housing mortgage scandal, will change his plea, according to paperwork filed yesterday.

Senior District Judge Gustave Diamond said a hearing will take place at 12:30 p.m. tomorrow in Pittsburgh federal court. The former New Castle city councilman and retired school administrator pleaded not guilty on Oct. 1, 2009, to two counts of mail fraud in addition to bank fraud and conspiracy to commit money laundering. The charges are felony offenses.

The government named DeRosa and real estate appraiser Anthony Staph Jr. as co-conspirators in the case. Their trial is scheduled to begin Monday. Staph is charged with one felony count of bank fraud.

The U.S. Attorney’s Office alleges DeRosa, Staph and Robert Ratkovich schemed to defraud First Commonwealth Bank using inflated appraisals of seven city properties to acquire a $250,000 loan.

Affordable Housing hired Ratkovich to serve as its consultant, earning approximately $61,000 in a two-year span. DeRosa had owned or co-owned four of the seven buildings.

DeRosa’s request to change his plea comes as defense attorneys and federal prosecutors submitted motions regarding the jury selection process, the credibility of a government expert and two witnesses, and the admissibility of evidence.

The Lawrence County Housing Authority created Affordable Housing of Lawrence County in 2003. The housing authority provided the nonprofit group with $200,000 and handed over its laundry concessions.

Affordable Housing purchased the properties in December 2005. In the three months that followed, five board members resigned and the agency declared itself insolvent with approximately $500,000 in debt.

Ratkovich, a Norwood Avenue resident, pleaded guilty in July 2009 to bank and mail fraud conspiracy in addition to money laundering conspiracy. The city councilman is scheduled to be sentenced at 10 a.m. Dec. 14.

The investigation also has produced charges against two men in cases related to Affordable Housing.

Gary Felasco, former county treasurer, pleaded guilty to one count of failing to file a 2005 federal tax return. He was sentenced in September 2009 to three years probation.

Felasco, whose last known address was in Warren County, gained $35,000 from the Affordable Housing purchases but did not report the income. A government report said the money reportedly was used for defense costs in Felasco’s May 2006 criminal trial. The state Attorney General’s Office charged him with theft and embezzlement while in office.

A New Castle contractor faces three counts of lying to a grand jury. Federal prosecutors charge that Michael Trover, an East Long Avenue resident, lied in his testimony regarding work involving Affordable Housing, the housing authority and Shenango Township’s housing rehab program.