A property purchased by a Jersey City mayoral candidate is connected to a local man indicted in a multimillion-dollar mortgage fraud scheme, but Lewis Spears says he never met the seller and was unaware of the criminal charges filed against Anthony Garvin in 2019.
The U.S. Department of Justice alleges that Garvin plotted a series of short sale flips in Jersey City and other municipalities by using straw borrowers and submitting loan applications using fake pay stubs and tax information to obtain mortgages and multiple Home Equity Line of Credit (HELOC) loans.
Spears purchased the home at 782 Grand Street from Garvin’s firm, Merchantman LLC, in March 2010 for $265,000, but after making a $4,800 down payment, he never made any mortgage payments. By the time Bank of America foreclosed on his property, Spears owed them $414,527 – including unpaid property taxes and liens against the property for code violations, according to records filed with the Hudson County Register of Deeds and Mortgages.
The Spears campaign has publicly addressed the foreclosure of the uninhabitable house, but said he wasn’t aware of Garvin.
“This is my first time ever hearing of this guy, ever,” Spears told the New Jersey Globe on Monday. “I wouldn’t be able to pick him out of a lineup.”
The circumstances around the transaction are vague, and the shadowy real estate deal seems to increase the mystery involving the purchase.
Spears says he bought the property at the suggestion of a man named James, who he described as a “friend from church,” but he was unable to come up with the friend’s last name.
“I wanted to buy a house,” Spears said. “After the deal went through, I never talked to him again.”
In a telephone interview, Spears was unable to recall details surrounding the purchase of his real estate transaction. He didn’t remember when he first saw the 782 Grand Street property, or who showed it to him, although he said his friend, James, might have been associated with the owner.
Records show that Spears filed a notice of real estate settlement on the Grand Street home on October 21, 2009, with Kenneth Williams listed as the seller, and a second notice one week later listing Village Capital & Investment in Mount Laurel as the mortgagee. Neither of the documents were signed by Spears; instead, they were both executed by Chris Zinn, the owner of a Berkeley Heights title insurance company.
Spears strongly denied being involved in the transaction in October, saying he didn’t make his deal until March 2010.
Hudson County records reflect contradicting documents on the seller.
A March 23, 2010 deed shows that Spears bought the house from Merchantman, the company owned by Garvin, for $265,000 but that document discloses that Spears had already sold the home to Kenneth Williams on February 5 for $1. Records show that Williams had purchased the same Grand Street residence in 2001 for $25,000.
The attorney who signed that document, Ralph P. Allocca, died in 2011 at age 52.
Court records identify Williams as a South Plainfield resident, and his home address is identical to the CEO of Visionary Designs Construction, a home renovation company. Williams did not respond to an email on Monday seeking comment on his connection to Garvin.
The charges against Garvin reflected transactions from January 2011 – about nine months after the deal on 782 Grand Street — through November 2017.
Spears said he was never interviewed by any law enforcement officials investigating Garvin.
Also on March 23, Spears’ signature appears on a mortgage with Franklin American Mortgage Company. The notary on Spears’ mortgage, Maureen R. Stillwell, was the same as the one who witnessed the transaction between Garvin’s firm and Williams. Stillwell, a closing supervisor at the Ideal Title Agency in Edison, also notarized the deed between Spears and Garvin’s firm.
Spears, who is taking on Jersey City Mayor Steven Fulop in the November 2 non-partisan municipal election, said he wasn’t familiar with records connected to his purchase of the Grand Street home.
“I never saw these docs,” he said of five documents provided to him by the NJ Globe.
The 2009 mortgage agreement, which Spears denied being part of, was never executed. Zinn Title Agency was not part of the final deal.
Still, Spears was unable to address details of how he received a mortgage on abandoned property with just two percent down with no apparent intention of improving it.
He told the NJ Globe that he tried to sell the house in 2011 and 2012, but that the mortgage holder was unwilling to approve a short sale.
That put him in a tough spot as the owner of a dilapidated home without the ability to make it usable. Spear said his credit rating plummeted and he was concerned that he might never be able to buy another house.
But just thirteen months after the foreclosure — Spears said he got nothing after Hudson County Sheriff Frank Schillari sold the Grand Street property at auction to a real estate developer, 161 Jordan LLC for $457,000 – he and his wife were approved by M&T Bank for a $322,000 mortgage on his current Jersey City residence.
Allegations against Garvin
The U.S. Attorney’s office claims that Garvin allegedly and unnamed conspirators arranged for “simultaneous fraudulent transactions on the same target property” in a multi-step process.
“In the first transaction, which involved the sale by the current owner, the conspirators convinced the financial institution holding the mortgage to accept the sale of the target property at a loss, usually to a buyer who was secretly a conspirator or an entity controlled by the conspiracy,” a statement by federal prosecutors said.
In the second transaction, prosecutors allege, “the conspirators flipped the same target property from the first buyer to a second buyer, who typically obtained a mortgage from another financial institution using false loan applications, pay stubs, bank account statements and title reports provided by members of the conspiracy. The second transaction frequently closed for significantly more or even double the price of the first transaction.”
The statement that accompanied Garvin’s indictment claimed that he “rigged the short sale process at each step to maximize the difference in price between the two transactions and keep the victim financial institutions from detecting the fraud.”
“The conspirators used various kinds of phony documents and misrepresentations, including generating false pre-approval letters from a New Jersey corporation controlled by a conspirator and generating phony deeds that backdated the closing date of the first transactions,” the statement said.
As they pursued HELOC loans, Garvin allegedly “submitted loan applications in the name of straw borrowers, who did not in fact reside at the subject properties, and used false and fraudulent information – including false pay stubs and tax information – to make it appear as though the straw borrowers made more money than they actually did.”
“The conspirators frequently applied for multiple HELOC loans on the same property nearly contemporaneously, withholding from each lender the existence of other applications,’ prosecutors said. “The conspirators then disbursed the funds received from financial institutions – which totaled millions of dollars – into various accounts they controlled to conceal their illegal activities and split the profits.”
Garvin was charged with one count of bank fraud conspiracy and five counts of bank fraud. He has pleaded not guilty and is still awaiting trial in the U.S. District Court.