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.
Thursday, March 25, 2010
Friday, March 5, 2010
Agency liquidates city-based credit union
March 6, 2010
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
Federal regulators closed a local credit union and cited its deteriorating financial condition as the reason.
The Lawrence County School Employees Federal Credit Union ceased operations at 1 p.m. yesterday.
The National Credit Union Administration reached an agreement with First Choice Federal Credit Union to purchase the credit union and assume a small percentage of its loans. Members of the defunct credit union can access their accounts beginning Monday at one of two First Choice locations: 2209 W. State St., Union Township, and 1400 Wilmington Road, Neshannock Township.
The NCUA’s action marks the fourth federally insured credit union to be liquidated this year. The National Credit Union Share Insurance Fund insures accounts to $250,000.
“The most important thing is that no member lost any money,” said Marilyn Wehr, First Choice’s chief executive officer. “We want everyone to feel safe and secure.
“It is important for the public to understand that this was an isolated incident limited to the Lawrence County School Employees Federal Credit Union and should not reflect on any other bank or credit union.”
First Choice employees have provided operational assistance to the former credit union since October.
The school employees credit union, chartered in 1937, reported a net loss of $3.4 million in the fourth quarter of 2009. Its cash assets dropped from $2.6 million to $151,000 from September to December. Total assets during the same period fell from $6.4 million to $2.6 million.
The credit union reported approximately 1,900 clients last year. Its membership was made up of the employees and families of the county school districts, the Midwestern Intermediate Unit IV and Westminster College. At closing, the customer base dropped to approximately 1,100.
The NCUA has contacted the U.S. Department of Treasury’s financial crimes unit to review the financial losses.
Wehr said First Choice opted not to hire the former credit union’s lone employee nor keep the North Mill Street site open. The liquidation also dissolved the volunteer board of trustees: President Kenneth Cotton, Joseph Croach, Brian Glass and Donna Pezzuolo.
Cotton said First Choice offered the best option for its members.
“That was the best way we could have gone,” he said. “I am personally relieved that all funds were insured and nobody lost any money.”
First Choice has assets of $22.3 million and serves approximately 4,400 customers. Membership is open to anyone who lives, works, worships or attends a county school.
Wehr said she will meet with school district business managers to outline the services First Choice offers. She also wants to reach out to those who left the credit union prior to its closing.
“I gave my word I would treat everyone as family as I do at First Choice,” she said.
The NCUA will administer a majority of the loans made through the school employees credit union.
“Due to the limited time available for review, First Choice was only able to acquire a small percentage of LCSE member loans,” Wehr said, “but we are committed to reconsidering refinance of any loan we did not acquire.”
For questions regarding school employee accounts, call First Choice at (724) 652-8393.
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
Federal regulators closed a local credit union and cited its deteriorating financial condition as the reason.
The Lawrence County School Employees Federal Credit Union ceased operations at 1 p.m. yesterday.
The National Credit Union Administration reached an agreement with First Choice Federal Credit Union to purchase the credit union and assume a small percentage of its loans. Members of the defunct credit union can access their accounts beginning Monday at one of two First Choice locations: 2209 W. State St., Union Township, and 1400 Wilmington Road, Neshannock Township.
The NCUA’s action marks the fourth federally insured credit union to be liquidated this year. The National Credit Union Share Insurance Fund insures accounts to $250,000.
“The most important thing is that no member lost any money,” said Marilyn Wehr, First Choice’s chief executive officer. “We want everyone to feel safe and secure.
“It is important for the public to understand that this was an isolated incident limited to the Lawrence County School Employees Federal Credit Union and should not reflect on any other bank or credit union.”
First Choice employees have provided operational assistance to the former credit union since October.
The school employees credit union, chartered in 1937, reported a net loss of $3.4 million in the fourth quarter of 2009. Its cash assets dropped from $2.6 million to $151,000 from September to December. Total assets during the same period fell from $6.4 million to $2.6 million.
The credit union reported approximately 1,900 clients last year. Its membership was made up of the employees and families of the county school districts, the Midwestern Intermediate Unit IV and Westminster College. At closing, the customer base dropped to approximately 1,100.
The NCUA has contacted the U.S. Department of Treasury’s financial crimes unit to review the financial losses.
Wehr said First Choice opted not to hire the former credit union’s lone employee nor keep the North Mill Street site open. The liquidation also dissolved the volunteer board of trustees: President Kenneth Cotton, Joseph Croach, Brian Glass and Donna Pezzuolo.
Cotton said First Choice offered the best option for its members.
“That was the best way we could have gone,” he said. “I am personally relieved that all funds were insured and nobody lost any money.”
First Choice has assets of $22.3 million and serves approximately 4,400 customers. Membership is open to anyone who lives, works, worships or attends a county school.
Wehr said she will meet with school district business managers to outline the services First Choice offers. She also wants to reach out to those who left the credit union prior to its closing.
“I gave my word I would treat everyone as family as I do at First Choice,” she said.
The NCUA will administer a majority of the loans made through the school employees credit union.
“Due to the limited time available for review, First Choice was only able to acquire a small percentage of LCSE member loans,” Wehr said, “but we are committed to reconsidering refinance of any loan we did not acquire.”
For questions regarding school employee accounts, call First Choice at (724) 652-8393.
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