Marat Lerner, 40, Brooklyn, New York, president of the Lerner Group, has been indicted for conspiracy to commit wire fraud, wire fraud, and money laundering in connection with a scheme to steal from clients of his mortgage loan modification business.

The indictment alleges that, in or about and between August 2016 and January 2021, Lerner, together with others, operated the Lerner Group. The Lerner Group promised clients it could help them modify their mortgages by reducing their monthly mortgage payments and their outstanding mortgage balances. Lerner used his access to his clients' banking information to create checks that appeared to be monthly mortgage payments to a purported escrow agent called Testoni & Villa and to his clients' mortgage banks. But in truth, Lerner secretly controlled Testoni & Villa, and instead of holding the money in escrow, or transferring it to the mortgage banks, Lerner deposited the checks in an account that he controlled, and which he used for a variety of personal expenses, including luxury goods and expensive meals and a BMW automobile. In total, Lerner misappropriated at least $550,000 from his clients.

Breon Peace, United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrest and charges.

"The defendant preyed on immigrants burdened by mortgage debt in the Russian community in Brooklyn, stealing their American dream through a scheme built on false promises to help them keep their homes, but in truth, he took advantage of their trust to enrich himself," stated United States Attorney Peace. "This Office has prioritized protecting vulnerable members of our district and we encourage them to come forward and put their trust in us to seek justice for them."

Mr. Peace expressed his appreciation to the U.S. Customs and Border Protection and the New York City Police Department for their assistance in this matter.

"The defendant, as we allege today, funded his own lavish lifestyle by operating a lengthy scam exploiting his victims' trust and fears in order to steal their money rather than fulfill his promise to modify their mortgages," stated FBI Assistant Director-in-Charge Driscoll. "The FBI will continue to make sure any individual willing to cheat and deceive clients out of their hard-earned money will face the consequences in the criminal justice system. We urge any additional victims of Mr. Lerner's scheme to contact us at 1-800-CALL-FBI or online at www.iC3.gov."

1. What inherent weaknesses were present in to process that allowed the fraud to take place.

2. What internal control could have prevented the fraud?

3. What are the possible red flags that allowed for the fraud detection.

Answer rating: 100% (QA)

1 Several inherent weaknesses in the process allowed the fraud to take place Lack of proper oversight Marat Lerner had unchecked access to clients ban... View the full answer