Insurance Fraud NEWS
Real estate magnate implicated in scheme to inflate claim losses
May 14, 2019, Ontario County, NY
The former COO of Morgan Communities pleaded guilty Monday to conspiracy to commit wire fraud, implicating — for the first time — local real estate magnate Robert Morgan in the scheme.
Scott Cresswell admitted that Morgan directed him and others to be part of a conspiracy that inflated insurance costs for damages to Morgan Communities properties. Total losses to insurers is placed at nearly $3 million, records show.
Cresswell, 52, of Ionia, Ontario County, led a buyout of the firm's management arm last year, and is now president and CEO of Grand Atlas Residential Realty Trust. Cresswell has agreed to cooperate with authorities in their investigation of Morgan Copmmunities.
"I made mistakes, and I just want to do the right thing," Cresswell said, appearing before U.S. District Judge Elizabeth A. Wolford in Buffalo, adding later: "I just want to get this behind me, for me and my family."
The plea is the latest development in an expanding federal probe into the dealings of Robert Morgan — once among the most active residential developers in western New York and a major player in downtown Rochester's revitalization.
In separate criminal cases, investigators claim Morgan-connected properties received almost $500 million in loans and other benefits that were based on fraudulently falsified and inflated information.
The alleged fraud duped lenders with inflated information about the worth of apartment projects, including fraudulent rent rolls, which provide the income-earning data of housing complexes. Implicated properties span Pennsylvania and central and western New York, including several in the Rochester area.
Allegations of insurance fraud
In Cresswell's case, the wire fraud charge relates to separate instances of alleged insurance fraud between March 2017 and April 2018, here as well as in Indiana and Pennsylvania.
Authorities claim Morgan entities skimmed money from payouts meant to repair roof damage to Rochester-area properties after the 2017 windstorm. Separately, the company allegedly overstated fire damage to an Indiana apartment complex, then pocketed the difference.
►On March 27, 2017, Cresswell received a $2.5 million contract for repairs at Summerwood Apartments in Merrillville, Indiana. But in May of that year, he and others sent the insurer a false invoice and lien waiver for more than $3.2 million in work.
►Between March to May 2017, Cresswell and others provided insurers with falsified contracts and invoices showing $263,000 in repairs to the Eden Square Apartments in Cranberry Township, Pennsylvania, despite the work having been done for $175,000.
►After the windstorm, Cresswell and others presented false contracts and invoices to insurers from June 2017 to January 2018, showing nearly $5.9 million in repairs for damages at 34 properties, despite knowing that anticipated costs were $3.65 million.
Cresswell told authorities that, at Robert Morgan’s direction, he directed others to “grind the best you can” to extract an extra $2.5 million from the claims.
“With the defendant’s plea today, this office, with our partners at the FBI and FHA, have peeled back yet another layer in this extensive fraud scheme,” U.S. Attorney James P. Kennedy said in a news release.
Sentencing guidelines recommend a prison sentence of 27 to 33 months. But if authorities determine Cresswell's assistance was substantial, they will recommend 12 to 18 months, court filings show.
Cresswell and other investors bought the management arm of Morgan Communities last summer, forming Grand Atlas Property Management/Grand Atlas Residential Realty Trust. Officials have said no member of the Morgan family is involved with Grand Atlas.
His plea follows those of mortgage broker Patrick Ogiony and Morgan's nephew Kevin Morgan, a vice president in the firm. Both admitted to conspiracy to commit bank fraud. Ogiony's plea back in March greatly increased the alleged extent of the alleged fraud, in dollar value, properties and by implicating untold "others" as co-conspirators.
Robert Morgan's son, Todd Morgan, and mortgage broker Frank Giacobbe have pleaded not guilty and are awaiting trial on federal fraud charges. Robert Morgan has not been charged.
Source: Democrat & Chronicle