When a federal judge asked Rochester-area businessman Kevin Morgan to explain his criminal wrongdoing in a $167.5 million mortgage fraud case, Morgan began his statement with these words: “At the direction of my uncle.”
Those six words could foreshadow where prosecutors are heading with the ongoing investigation into Morgan Management and Morgan Communities, a group of companies that own about 3,500 apartments in the Buffalo area. And they could mean trouble for Morgan’s uncle, Robert C. Morgan, the companies' founder and chief executive officer.
Kevin Morgan, the vice president of Morgan Management, pleaded guilty on Friday to felony conspiracy to commit bank fraud. Kevin Morgan is now a cooperating witness and is helping federal prosecutors and agents with the investigation, his attorney, Patrick J. Brown, told U.S. District Judge Elizabeth A. Wolford.
The terms of Kevin Morgan’s guilty plea require him to provide complete and truthful information about the mortgage fraud scheme. Kevin Morgan and three other businessmen are charged in the case. So far, Robert Morgan is not among them.
The Buffalo News has been reporting since September 2017 on questions surrounding the way the Morgan companies had acquired and financed several area apartment complexes.
Could Kevin Morgan’s declaration that he committed crimes at “the direction of my uncle” mean that Robert Morgan will also be charged in the case?
“That is not for me to say,” Brown told The News Friday afternoon. “What I can say is that my client is going to give his complete cooperation to the federal government. Where the government takes it from there is up to them.”
Does Kevin Morgan blame all the criminal activity on his uncle?
“No, Kevin is not ducking away from his own responsibility. He did things that were wrong, and he knew it was wrong,” Brown said. “The reason my client said he was acting at the direction of his uncle is that he wanted to put all this in some context. Kevin didn’t just wake up one morning and say, ‘I’m going to do this.’ ”
Federal authorities declined to say Friday whether Robert Morgan is a target of their investigation.
When asked in May if charges may be filed against Robert Morgan, U.S. Attorney James P. Kennedy said, “Everybody is in play that may have been engaged in fraudulent conduct."
Robert Morgan did not respond to an interview request from The News. His attorney, John F. Speranza, attended Friday's court proceedings but could not be reached by The News for comment.
Kevin Morgan and his co-defendants were indicted in May on charges that they provided fraudulent information to lenders that enabled them to obtain mortgages worth $167.5 million for apartment complexes in Buffalo and other cities.
According to prosecutors, “The defendants misled the financial institutions regarding the occupancy of properties. For example, Kevin Morgan: conspired to provide false rent rolls to lenders and appraisers on a variety of dates, overstating either the number of renters in a property and/or the rent paid by occupants; conspired to provide false and inflated income statements for the properties; and worked with others to deceive inspectors into believing that unoccupied apartments were, in fact, occupied.”
Since at least September 2017, Morgan Communities and Morgan Management, based in the Rochester suburb of Pittsford, have been subjects of a fraud investigation conducted by the U.S. Attorney’s office, the Buffalo FBI office and other agencies.
The Morgan companies are one of the biggest owners of apartments in Western New York. The Morgan companies own, co-own or manage about 3,500 apartments in the Buffalo area. Their holdings include include Maplewood Estates in Hamburg, Green Lakes Apartments in Orchard Park, Park Place in South Buffalo, Raintree Island and Paradise Lane in the Town of Tonawanda, and Williamstown Village, Garden Village Apartments and Idylwood Resort Apartments in Cheektowaga.
Kevin Morgan is the first defendant to take a guilty plea in the case. The indictment charged him with one count of attempted mail fraud, 12 counts of wire fraud and two counts of bank fraud, all felonies.
The alleged scheme took place between March 2011 and June 2017.
Also charged are Frank Giacobbe, 43, of Amherst; Patrick Ogiony, 34, of Buffalo; and Todd Morgan, 29, of Rochester, all of whom pleaded not guilty. Todd Morgan is Kevin Morgan’s cousin.
The News has reported that federal investigators obtained records and questioned many people in the Buffalo area who did business with Robert Morgan’s companies.
Robert Morgan, who is in his early 60s, built vast real estate holdings over the past 25 years, The News has reported. His companies now own or manage some 36,000 units in 14 states. He is a major real estate player in Buffalo.
Robert Morgan has denied any wrongdoing. In May, he said his companies were cooperating with the federal probe. He said his company is "current on all loan obligations" and added that Morgan Communities has worked hard to revitalize and promote cities where it does business.
Assistant U.S. Attorneys John D. Fabian and Douglas A.C. Penrose are handling the case, working with agents from the FBI agents and the Federal Housing Finance Agency's office of Inspector General.
Story topics: watchdog