Monmouth County Man Sentenced to State Prison for $2.9 Million Mortgage and Investment Scams

TRENTON, NJ – February 20, 2009 – (RealEstateRama) — Attorney General Anne Milgram and Criminal Justice Director Deborah L. Gramiccioni announced that a Monmouth County man was sentenced to state prison today in connection with a series of mortgage and investment scams through which he stole approximately $2.9 million from victims.

Spiro Pollatos, 46, of Marlboro, was sentenced to 13 years and six months in state prison, including four years and six months without possibility of parole, by Superior Court Judge Salem Vincent Ahto in Morris County. Pollatos pleaded guilty on Oct. 17 to a charge of first-degree money laundering. Under the plea agreement, he was required to enter a consent judgment to pay restitution to his victims and forfeit assets seized in the investigation.

“This defendant caused financial devastation for many victims,” said Attorney General Milgram. “We are committed to vigorously investigating and prosecuting financial fraud, as this lengthy prison sentence demonstrates.”

An investigation by the Division of Criminal Justice Major Crimes Bureau 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 about $890,000 to buy the 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.

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 to pay personal expenses.

Velitschkow was sentenced on Dec. 19, 2008 to 10 years in prison by Judge Ahto. She pleaded guilty on June 27, 2008 to second-degree money laundering.

On Jan. 9, Thomas Giannisis, 42, of Marlboro, the owner of the Middletown Diner, was sentenced to 180 days in jail as a condition of a four-year term of probation by Judge Ahto. He pleaded guilty in June to third-degree theft by failure to make required disposition of property received in connection with the fraud involving the Yellow Rose Diner. He also entered a consent judgment to pay $73,400 in restitution.

Giannisis’ 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 sentencing hearing was handled by Deputy Attorney General Rosero. 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, advertising 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.