ALBANIE, NEW YORK – Eugene Rosen of Palm Beach Gardens, Florida agreed to pay the United States $ 805,000 to settle charges that he made improper payments to his family trusts, ignoring his obligation to make payments on government-backed mortgages, and submitted a False Statement to the Federal Housing Administration (FHA) of the U.S. Department of Housing and Urban Development (HUD) regarding these payments in violation of the Civil Equality Tax Removal Act and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) 1989 … Acting US Attorney Antoinette T. Bacon.
Ellsworth Commons, a mixed-use residential and commercial property in Malta, New York, was owned by Ellsworth Partners, LLC., A company owned and operated by Rosen. In 2010, Ellsworth Partners obtained an FHA-insured mortgage to finance the construction of Ellsworth Commons. FHA agreed that if Ellsworth Partners defaulted on a mortgage, FHA would pay the lender the outstanding balance. In return, Ellsworth Partners agreed to use the proceeds from the project only for purposes permitted by the FHA. Transferring money to Rosen Family Trusts in the event of non-payment of mortgages was not a permitted goal.
At various times, Ellsworth Partners borrowed money from outside sources, including trusts Rosen set up for his family, and repaid these loans with project funds. On at least three occasions, Rosen was advised by HUD that Ellsworth Partners could not use project funds to repay these loans. From mid-2016 to early 2018, Ellsworth Partners stopped paying its mortgage, leading to a default. To prevent foreclosures, the FHA agreed to pay off a significant portion of the mortgage after Rosen confirmed that, although the mortgage was unfulfilled, Ellsworth Partners paid its lender all of the net cash remaining after the project costs were paid. This claim was false because, as Rosen admitted in the settlement agreement, “From April 2016 to January 2018, when the mortgage was defaulted, Ellsworth Partners made unauthorized payments on loans to Rosen’s family trusts and other entity.”
“Eugene Rosen falsely testified that Ellsworth Partners used all available funds to repay a federally insured mortgage for housing built for moderate-income families, when in fact he transferred some of these funds to his family’s trust accounts,” said the executing duties of the US Attorney Antoinette. T. Bacon. “Our office will continue to work with HUD to prosecute those who violate the Affordable Housing Program.”
The investigation and settlement was the result of a coordinated effort by the US Attorney’s Office for the Northern District of New York and HUD’s Office of Regional Advisers for New York and New Jersey. The United States was represented by Assistant United States Attorney Adam J. Katz.