U.S. Government Sues Real Estate Pros For Brooklyn Mortgage Scam

BROOKLYN, NY — Nine homes in Brooklyn were wrapped up in a massive mortgage scam that has prompted a civil suit from the U.S. government, prosecutors announced this week.

The United States filed a civil complaint against three New York men accused of running a years-long mortgage scheme that defrauded the government's housing agencies, the United States Attorney for the Eastern District of New York announced.

The complaint details 10 times between 2013 and 2016 that the men — Iskyo Aronov, RonBorovinsky and Michael Konstantinovskiy — preyed on homeowners hoping to avoid foreclosure by setting up fake "short sales" of their homes through a federal program.

“As alleged, these defendants fraudulently obtained homes at depressed prices at the expense of a taxpayer-funded program designed to assist borrowers seeking the American Dream of home ownership,” Acting U.S. Attorney Seth DuCharme said. “This Office is committed to protecting the integrity of the FHA insurance program from those who try to enrich themselves through predatory mortgage fraud schemes.”

Under the federal program, homeowners with defaulted mortgages that are insured by the Federal Housing Administration can sell their properties in a "short sale" for less than the balance of the mortgage if the sale is for fair market value. After the approved short sale, HUD covers the outstanding mortgage balance not covered by sale proceeds using federal funds.

The program requires what's known as an "arm's length transaction," or that the seller and buyer aren't related or affiliated with one another.

In the mortgage scam, the men, under a company called My Ideal Property Group, manipulated the short sale so they were controlling almost every step of the process, prosecutors said.

They would pay homeowners to sign over their deeds, hire a fake "agent" to pretend to market the properties and then sell it to one of their own shell companies, according to court documents.

The homes sold through the scam include nine in Brooklyn — including three in Bed-Stuy and two in Bushwick — and one in Queens Village, documents show.

It is not the first legal action taken against at least two of the men, who once had their business featured on the reality TV show Million Dollar Listing New York. Aronov and Konstantinovskiywere also charged in 2019.

The scam in Monday's lawsuit caused millions of dollars in damages to the Federal Housing Administration since the men would file false or misleading documents so the sales would be approved by the federal government, prosecutors said.

The fraud meant the men not only got the properties at below-market value, but were given broker fees and "induced lenders to release the FHA-insured mortgages at a loss."

"In turn, HUD paid the lenders’ claims for FHA insurance from federal funds. These payments by HUD were artificially inflated as a result of the defendants’ fraudulent conduct," officials said.