Borch Drillman's co-conspirator, Mark Silver, pleaded guilty to his role in a mortgage fraud scheme involving a Cincinnati apartment complex.
The Justice Department alleges that Silver and business partner Frederick Shulman used stolen identification to buy the Williamsburg mansion in Cincinnati for $70 million. The investors then resold the property to Drillman for $96 million, and lenders extended a $74 million loan based on the inflated price.
The Justice Department said Silver and his co-conspirators defrauded both their lenders and Fannie Mae, which frequently purchased the private loans.
Lakewood, N.J.-based Madison Title handled the closing of both transactions.
Silver, of Suffern, New York, pleaded guilty to one count of conspiracy to commit wire fraud affecting financial institutions. Silver faces up to five years in prison. His sentencing hearing is scheduled for November, according to court documents.
Silver's lawyer, Richard Weber, declined to comment.
Silver was previously managing partner of Rhodium Capital Advisors, a New York-based real estate investment firm focused on affordable housing. In 2022, he also founded a company that bought the parent company of Sunnyside Federal Savings & Loan, an Irvington, New York community bank.
Drillman pleaded guilty to the Cincinnati deal and to his role in another fraudulent mortgage transaction in Michigan in December. Schulman has not yet been indicted.
Court documents shed new light on how Silver and his co-conspirators hatched a scheme to hide the low original sales prices from lenders.
After Silver and Shulman used stolen identities to purchase properties, the attorney sent an email to Silver and a Madison Title employee in February 2019. “The purchase price for the attached deed has not been determined. Please confirm that you may send it to the buyer's attorney,” the email read.
Later that day, Silver responded: “If there's no price listed anywhere, that's fine. Make sure you communicate to Madison Title that one mistake can kill the deal. Only one person should talk to the end buyer's attorney, and that attorney should be extremely careful.”
Madison Title, one of the largest property insurers in the tri-state area, argues that the emails show Madison understood the Cincinnati transaction to be an arm's length transaction.
“As reflected in the cited emails, Madison had no knowledge of the mortgage fraud scheme,” a Madison Title spokesman said.
Madison Title has not been accused of wrongdoing, but it has been effectively blacklisted by Fannie Mae and has had most of its business suspended.
The Justice Department's charges against Silver are part of a broader crackdown on commercial mortgage fraud across the country. The Federal Housing Finance Agency is also involved in the fraud investigation. Last month, Lakewood, New Jersey, financier Aron Puretz pleaded guilty to participating in a $60 million fraud scheme. Justice Department lawyers said at a recent hearing that they plan to press charges unless Puretz's son, Eli Puretz, accepts a plea deal.
Many of the loans under investigation were transferred to government-sponsored agencies Fannie Mae and Freddie Mac, and regulators have suspended business with certain brokers, title insurers and appraisers as they continue their investigation.