The bargain offered by Town of Boston businessman Robert E. Baschmann Jr. sounded a bit too good to be true, and federal prosecutors say it was.
His company in 2007 started offering 30-year mortgages with a fixed interest rate of 4 percent. In order to get one, all you had to do was make an upfront payment just 1 percent of the total value of the loan.
The problem was, according to federal prosecutors and the FBI, Baschmann kept the upfront payments and -- except in just one case -- never provided the money for the loans. Authorities say about 140 people were cheated out of $900,000.
U.S. Attorney William J. Hochul Jr. announced Thursday prosecution of Baschmann as part of a new attack on mortgage fraud by prosecutors throughout the U.S. Justice Department.
He said a new task force in his office is also prosecuting cases involving a disbarred real estate attorney from Amherst who cheated a financing company out of more than $500,000, and a Rochester woman who cheated her own parents by forging her father's name on a reverse mortgage application.
Prosecutor Trini E. Ross works on the task force with members of the FBI, Secret Service, Postal Inspection Service and the U.S. Bankruptcy Court trustee's office.
Hochul also announced the recent hiring of Kathleen A. Lynch, a mortgage fraud expert who worked with the Western New York Law Center and Buffalo's Anti-Flipping Task Force. She is now an assistant U.S. attorney and will work with Ross on the task force.
Fifteen mortgage fraud cases are currently under investigation in Western New York, prosecutors said. The cases include:
*The Baschmann case. Baschmann started a company called Empire Logging & Timber in 2007, according to FBI Special Agent Luke Humphrey. Baschmann claimed the company used timber as collateral to get mortgage money from banks, the agent said, but in fact, the company "never actively engaged" in the logging or timber business.
Victims who paid 1 percent upfront to get mortgage loans never actually got the loans, and Baschmann instead put the money into his own bank accounts or used it for personal expenses, the FBI agent said in court papers.
Baschmann faces a mail fraud charge and has pleaded not guilty.
*Mary Ann Fulbright of the Rochester area is accused of committing "reverse mortgage fraud" against her parents. Prosecutors say she used forgeries and false documents to get $148,650 from a reverse mortgage on her parents' home.
*Robert R. Goods, a former real estate attorney from Snyder who was recently disbarred, faces a federal charge of bank fraud.
Goods admitted in state court last week that he used a Ponzi scheme -- using money from new investors to pay off earlier investors -- to swindle $522,974 from a mortgage financing company, an Evans physician and a Hamburg woman. The federal investigation is continuing.
Hochul said anyone who believes they have been victimized or has information about a mortgage scam, should call the task force at (716) 843-5646.