Monmouth County Man Pleads Guilty to First-Degree Money Laundering in $2.9 Million Mortgage and Investment Scams

TRENTON, NJ – October 17, 2008 – (RealEstateRama) — Attorney General Anne Milgram announced that a Monmouth County man pleaded guilty today to first-degree money laundering in connection with a series of mortgage and investment scams through which he and his girlfriend stole approximately $2.9 million from victims.

Spiro Pollatos, 46, of Marlboro, pleaded guilty to a charge of first-degree money laundering before Superior Court Judge Salem Vincent Ahto in Morris County. The charge was the result of an investigation by the Division of Criminal Justice Major Crimes Bureau.

Under the plea agreement, the state will recommend a sentence of 15 years in state prison, with five years of parole ineligibility. Pollatos must enter a consent judgment to make full restitution to his victims and must forfeit assets seized in the investigation.

An investigation by the Division of Criminal Justice determined that Pollatos conspired with others, including his live-in girlfriend, Crystal Velitschkow, 50, to steal approximately $2 million through fraudulent loan services for which he collected excessive fees and commissions. In addition, Pollatos was charged with inducing several victims to invest approximately $890,000 to purchase the former Yellow Rose Diner in Keyport. The deals were bogus and the victims – including an 80-year-old retiree who invested $500,000 – never got ownership of the business.

“This defendant dealt in lies and deception, stealing millions of dollars from his victims and leaving behind a trail of financial devastation,” said Attorney General Milgram. “With this plea, he will face a lengthy prison term. He also must pay restitution, starting by forfeiting assets seized from him last year in the investigation.”

From January 2004 through March 2007, Pollatos and Velitschkow funneled more than $2.7 million in criminal proceeds through a personal bank account they controlled, using the money to buy real estate, cars and boats and pay personal expenses. Velitschkow pleaded guilty on June 27 to second-degree money laundering. She faces a sentence of 10 years in state prison.

Pollatos is scheduled to be sentenced on Nov. 15, and Velitschkow is scheduled to be sentenced on Nov. 11. They are being held in the Morris County Jail in lieu of $2 million bail each.

Also on June 27, Thomas Giannisis, 42, of Marlboro, the owner of the Middletown Diner, pleaded guilty to a third-degree charge of theft by failure to make required disposition of property received in connection with the fraud involving the Yellow Rose Diner. The state will leave his sentence to the discretion of the court. His wife, Maria Giannisis, 33, agreed to waive indictment and be charged by accusation with the same charge. She was admitted into the Pre-Trial Intervention program.

The case was investigated by Detective Sgt. Louis A. Matirko of the Division of Criminal Justice Major Crimes Bureau. It has been prosecuted by Deputy Attorneys General Rodger Wolf, Janet Bosi, Patrick Flor and Marysol Rosero. Today’s plea was taken by Deputy Attorneys General Rosero and Bosi. Auditor Thaedra Chebra of the state Division of Taxation and Chief Investigator Leona Joyner of the Department of Banking and Insurance Enforcement Bureau assisted in the investigation.

State investigators arrested Pollatos, Velitschkow, Thomas Giannisis and three other defendants on Dec. 19, 2007, on charges of conspiracy to commit racketeering, theft and money laundering. The state seized and placed liens on seven bank accounts, five cars, three boats, 12 pieces of real estate and the Middletown Diner on Route 35 in Middletown.

Pollatos was at the center of the schemes. Although Pollatos lost his state mortgage broker’s license after pleading guilty to theft in May 2001 in a mortgage fraud scheme, he began operating a business called Lenders’ Capital Mortgage Company in Hackensack, which he licensed under the name of Velitschkow’s brother-in-law, Thomas J. Prussack, 40, of Keansburg. Prussack, one of the other defendants charged in December, represented himself as the owner.

Pollatos targeted victims in the Greek community who often were elderly. He advertised his mortgage company in a Greek newspaper. Pollatos offered to secure large loans for victims who would not be able to get them in the regular credit market. Pollatos and his unlicensed co-defendants submitted false information in processing loans and charged clients excessive loan commissions and fees, typically demanding the huge sums for the first time at the loan closing. In some cases, Pollatos stole the majority of the loan proceeds. The defendants defrauded clients of approximately $2 million through such schemes.

In one instance, Pollatos took an $85,000 commission on a $245,000 home equity loan. In another, he kept $133,000 in check proceeds that he was supposed to use to pay down a first mortgage for the borrower. He mortgaged homes beyond their value and the owner’s ability to pay. For example, he secured $418,500 in loans on a Keansburg property worth only $215,000.

In offering loans, Pollatos and his co-defendants operated under the names Lenders’ Capital Mortgage Company, Investors’ Mortgage Company, which was the business tied to his 2001 guilty plea, and a third phony name that was similar to the name of a legitimate licensed firm. The schemes caused financial devastation for at least 20 victims and had an adverse impact on two financial institutions that provided loans.

In the fraud involving the Yellow Rose Diner, Pollatos and Giannisis offered to become partners with an 80-year-old retired food supply salesman to run the diner. Through Pollatos, the man mortgaged his home and also obtained a home equity loan, investing approximately $500,000 in loan proceeds in the venture. While a $305,701 check from the victim did go to the diner’s owner, the sale of the business was not completed and the victim never recovered his money.

While Pollatos and Giannisis were still dealing with the first victim, Pollatos secretly solicited $150,000 from a second investor, a woman, who also was told she could run the Yellow Rose diner with them as partners. The woman – believing she had purchased the business without the real estate, but with a lease on the building – completed extensive renovations, only to be evicted by the owner, who told her that her lease was invalid.

The other diner victims were Velitschkow’s sister and brother-in-law, Prussack, who gave Pollatos and Velitschkow $330,000 as an investment in the diner. Pollatos and Velitschkow spent the money on personal expenses.

In addition to Prussack, the other defendants who were charged with Pollatos in the mortgage fraud schemes were George Papas, 64, of Ridgewood, Marco Sigona, 33, of Hackensack, and Mario LaGrasta Jr., 35, of Little Ferry. Though unlicensed, they assisted him in soliciting and processing loans.

In June, those four defendants – Prussack, Papas, Sigona and LaGrasta – agreed to waive indictment and be charged by accusation with violation of the New Jersey Licensed Lenders Act, a third-degree crime. They were admitted by Judge Ahto into the Pre-Trial Intervention Program, conditioned on their providing truthful testimony in the state’s investigation.