Disbarred attorney indicted for lying to federal investigators

`A law license is not a license to steal'

February 12, 2014 From U.S. Attorney's Office, Eastern District of New York

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An indictment was unsealed Wednesday charging disbarred New York attorney Barry Stephen Zornberg with lying to federal investigators about his role in a foreclosure rescue fraud scheme. The scheme ensnared at least 10 families, defrauding them of approximately $1.3 million in home equity and causing some of them to lose their homes.

As alleged, the foreclosure rescue fraud was carried out from Empire Property Solutions, LLC (Empire). Zornberg and two principals of Empire encouraged distressed homeowners to “refinance” their residences with Empire, when, in reality, the victims were tricked into transferring title to their homes to straw buyers and paying large fees to Empire.

As part of this scheme, the victims lost title to their homes, valued in the aggregate at $4.3 million. Zornberg and his partners in the scheme allegedly extracted more than $1.3 million in equity from the victim families’ homes, leaving the victim families significantly worse off than when they asked for help. The straw buyers made no payments on the homes, causing the victims’ homes to go into default. Almost all of the victim homeowners face foreclosure due to the scheme, and a number have been dispossessed.

As detailed in the indictment, when interviewed by federal investigators, Zornberg, the alleged architect of the scheme, falsely stated that he advised the victims to not continue with the scheme. In fact, he advised the opposite, thereby generating large fees for himself.

“The defendant used the dream of home ownership and a fragile economy to lie and steal from trusting individuals,” Inspector-in-Charge Philip Bartlett stated.

U.S. Attorney General for the Eastern District Loretta Lynch said in a statement, “As set forth in the indictment, the defendant, a disbarred attorney, lied to federal investigators about the role that he played in this fraud scheme, which took advantage of people who were looking to save their homes from foreclosure. A law license is not a license to steal or lie.”

If convicted, Zornberg, 54, faces up to five years’ of imprisonment.