Investor Gets 2-Year Sentence For Mortgage Fraud As Seniors Are Booted From Philly Complex
Another member of a prominent New Jersey real estate family has been sentenced for his role in a multimillion dollar mortgage fraud scheme that contributed to grave issues at affordable housing complexes nationwide, including one in Philadelphia.
Chaim “Eli” Puretz received a 24-month sentence on Thursday, The Real Deal reported. This was less than the maximum of five years he was potentially facing.
U.S. District Court Judge Robert Kirsch said Eli should be “treated very differently from his co-conspirator father” Aron Puretz, who was sentenced to five years in prison last month. The younger Puretz was a “novice swimming in a shark’s pool,” the judge said.
Both men are also tasked with paying $22M in restitution to their lenders.
Companies owned by the family controlled more than 16,000 affordable housing units across 21 different states, The Philadelphia Inquirer reported. Many of them were purchased with municipal bonds obtained through a nonprofit with a fraudulent board of directors.
Residents have reportedly been injured and even died due to issues in these communities. Municipalities nationwide have paid millions to relocate tenants and prevent utility shutoffs.
The Puretz portfolio once included the Brith Sholom House and Pavilion, two neighboring senior apartments buildings in the Wynnefield Heights section of Philadelphia.
On Thursday, residents received notice that they will need to move out within 90 days, the Inquirer reported. The Philadelphia Housing Authority, which purchased the buildings last year, will help tenants relocate.
Officials have reportedly been aware of issues at the complex since at least 2019 when its rental license was temporarily suspended.
The situation came to a head last year when Philadelphia Gas Works threatened to shut off the building’s heating system due to $1.5M in unpaid utility bills. Residents also reported a litany of issues, including leaks, vermin infestations and broken elevators.
PHA purchased the complex for $24M last summer after it ended up in receivership. The agency initially planned to fix the buildings up for between $30M and $40M, but that budget had ballooned to $112M by November after more issues were uncovered.
Eli’s uncle Chaikel Puretz is scheduled to go on trial in Indiana later this month. He is accused of stealing utility payments from residents.
Aron pleaded guilty to a $55M fraud scheme, including forged financial statements, ahead of his sentencing last month. He and his co-conspirators at Apex Equity Group are charged with misleading lenders about at least three properties between 2016 to 2022.
Aron admitted to presenting inflated purchase and sales documents to Freddie Mac so he could obtain a mortgage that exceeded a property’s true purchase price in 2017.
In 2019, he bought the Big Country Chateau apartments in Little Rock, Arkansas. Aron hid his role in the deal from Freddie Mac because the lender would not approve loans for his properties.
The scheme had grown by 2020, when Aron and his co-conspirators purchased the Troy Technology Park outside Detroit for $43M, per court records. They then presented lenders with fraudulent documents claiming the sale price was actually $70M.
