Landlord Of Ailing NJ Apartment Complex Guilty Of $229M Real Estate Scheme

ESSEX COUNTY, NJ — The landlord of an ailing apartment complex in the Oranges has pleaded guilty to a $229 million real estate scheme involving several large properties across the nation, federal prosecutors say.

Mordichai Weiss, 29, of Monsey, New York, pleaded guilty to one count of wire fraud conspiracy on May 21, according to the U.S. Attorney’s Office.

Prosecutors said Weiss participated in a scheme to fraudulently obtain more than $229.6 million in loans between April 2022 and June 2023, which was used to buy a roster of multi-family and commercial properties through deception.

Ultimately, Weiss defaulted on the loans or the loan balances substantially exceeded the value of the underlying collateral – resulting in approximately $94.4 million in losses to lenders such as Fannie Mae and Freddie Mac.

“When fraudsters like Weiss and his co-conspirators provide false financial information to obtain loans on these properties, they not only defraud the lenders, but they also harm innocent tenants in New Jersey and across the U.S. who live in these buildings,” Federal Housing Finance Agency Office of Inspector General special agent in charge Robert Manchak said.

The charge of wire fraud conspiracy carries a maximum penalty of 20 years’ imprisonment and a fine of up to $250,000, or twice the gross loss to the victim or gain to the defendant, whichever is greatest. A sentencing date hasn’t been scheduled yet, authorities said.

Federal prosecutors said the real estate scheme involved apartment buildings in New Jersey, New York, Maryland, Kentucky, Florida and Texas.

‘THE CASTLE’: NJ TENANTS STILL STRUGGLING, ADVOCATES SAY

One of the properties cited in court documents was 75 Prospect Street in East Orange, which Weiss and his co-conspirators purchased around April 2022, prosecutors said.

Four other apartment complexes in East Orange were also purchased as part of the scheme in February 2023, documents show: 49 Prospect Street, 444 Prospect Street, 161 North Arlington Avenue and 356 Williams Street.

The apartment building at 75 Prospect Street, also known as “The Castle,” has come under fire from tenants and advocates in the past few years, who have alleged that they are living with mold, leaks and other “unacceptable” conditions – as well as attempts to evict them and jack up their rents.

According to Rutgers Law School, there’s a complicated history behind the property:

“Mordechai Weiss acquired 75 Prospect Street in 2022 after Walker & Dunlop approved a company in his name for a nearly $13.5 million mortgage loan. Tax records valued the building at $8.5 million at the time. Under Weiss’ control, the building’s condition declined rapidly. 75 Prospect Street residents struggled with major leaks, mold and elevator outages that eventually culminated in a mass eviction notice Weiss served on all tenants in September 2022. The building’s residents responded by organizing and suing Weiss.”

Advocates with Rutgers Law School said the situation continued to escalate:

“The tenants’ lawsuit brought to light improprieties in the mortgage agreement, leading lenders to accuse Mordechai Weiss’s wife, Baysa Weiss, of fraud in 2023 foreclosure filings. Now over two years later, the foreclosure case remains open, while the lender-chosen rent receiver filed a hardship application that proposed raising all of the families’ monthly rents, which currently average $2,435/month, to $4,482. The proposed 100% rent increases will benefit Walker & Dunlop by increasing the building’s value at sale. Although the City of East Orange rejected the application as deficient, counsel for the receiver stated that she intends to refile. Meanwhile, over half the 44 apartments in the building remain vacant.”

>> Related: Ailing Apartment Building In NJ Now Faces Massive Rent Hike, Advocates Say

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