Bush pardons mortgage fraudster who escaped restitution
Update at bottom: Victims 'thank' Bush for 'worst Christmas present' ever, White House rescinds pardon
Father gave $28,500 to RNC this yearPresident George W. Bush has characterized the recent US housing crisis as a product of greed and Wall Street excess.
But that doesn't seem to have been Bush's opinion when he pardoned Isaac Toussie, 30, of Brooklyn, the son of a New York real estate developer, who defrauded the Housing and Urban Development Department government for millions of dollars and pled guilty to inflating the incomes of at least 100 families to make them eligible for federal loans in the lead-up to the worst housing crisis the United States has ever had.
Toussie was among 19 pardoned by President George W. Bush in his semi-annual pre-Christmas clemencies.
What's more, Toussie's father gave $28,500 to the Republican National Committee this year, according to a RAW STORY analysis of federal campaign finance records available at the nonpartisan campaign finance watchdog Open Secrets.
Robert and his son were sued in 2001 in what was billed as the largest real-estate discrimination lawsuit ever filed in New York State on behalf of some 400 families. They said they were duped into buying overpriced and shoddily built properties.
The two were accused of being in cahoots with more than a dozen lenders to defraud minority home buyers, most of whom had imperfect credit records.
Toussie admitted to mortgage fraud and to defrauding Suffolk County by issuing letters that inflated the value of a property the county and a town bought by $2.7 million.
As Politico's Ben Smith notes, Toussie and "his father were poster children in a 2002 BusinessWeek piece on the dark side of the housing boom."
Issac Toussie was sentenced to five months in prison and five months' home detention in 2003 and was fined $10,000. He escaped restitution after prosecutors said that records had been destroyed in the collapse of the World Trade Center on Sept. 11.
Excerpts from 2002 BusinessWeek article, "The Housing Boom's Dark Side: Scams and over-extended buyers threaten the market's strength":
In some cases, the trail of corruption leads all the way to homebuilders who lure buyers with instant financing. In hindsight, says Maxine Wilson, a law firm administrator, the seamless loan process should have tipped her off that the house she bought in a New York City suburb in 1997 had problems: "It was way too easy. When the loan manager walks into a builder's office, takes your application, and guarantees that you're going to be approved, something is wrong."
Now, Wilson says her home is sinking. The foundation is cracked, and she has mildew in her attic--where the bathroom vents. Wilson bought the house for $140,000 from father-and-son builders Isaac and Robert Toussie. Two years later, it was appraised for $15,000 less in one of the hottest U.S. housing markets. Wilson and 200 others filed a suit in federal court against the Toussies, but it was thrown out on Sept. 20 after failing to qualify as a class action. In May, 2001, Issac Toussie pleaded guilty to fraud in federal court on Long Island for illegally obtaining federal housing loans. On Sept. 25, Robert Toussie's lawyer, Richard C. Hamburger of Hamburger, Maxson & Yaffe LLP in Melville, N.Y., said his client is so confident of the quality of his houses that he will offer to buy back those of Wilson and the two other lead plaintiffs and pay their moving expenses and $5,000. Hamburger said a letter will go out to the plaintiffs on Sept. 26.
Aggressive mortgage practices could haunt banks as the economy weakens. In their eagerness to lend, banks have pushed too many people to take on too much debt. These borrowers are extremely vulnerable to higher interest rates and rising unemployment. That raises the prospect of a flood of defaults. And a wave of distressed properties would have major implications for the housing market--one of the few areas of the economy that is thriving. Fannie Mae and Freddie Mac, government-sponsored mortgage guarantors, which purchase about half of all mortgages, are likely to exercise their right to force banks to buy back bad loans.
FULL ARTICLE AT THIS LINK
'Victims feel like the roof has fallen in'
Homeowners who feel they were victimized by the convicted fraudster blasted President Bush for giving them the "worst Christmas gift" ever.
"President Bush's pardon of Isaac Toussie is a nightmare for homebuyers who watched their houses - and their lives - fall apart around them," John Marzulli and Celeste Katz report for New York City's Daily News.
Maxine Wilson, whose $146,000 ranch house became the ultimate money pit after its "boiler went, toilets backed up, basement flooded, closet doors fell off and foundation cracked," tells the paper, "The politically connected get what they want, and little people like us are just left to sink or swim. Thanks to the President for the worst Christmas gift you could have ever given us."
In an accompanying Daily News story, Peter Seidman, "a lawyer who represents 460 people who say they were fleeced," complains to the paper, "We're in the middle of a mortgage crisis [and] this is somebody who was alleged to have participated in predatory lending practices."
Seidman adds, "To pardon Isaac Toussie is a kick in the teeth to homeowners struggling with mortgages they can't afford."
The paper also reports that U.S. Pardon Attorney Ronald Rodgers received the pardon petition on August 7, a few months after the elder Toussie's RNC donation.
"It clearly suggests a link between the pardon and campaign contributions," Melanie Sloan of Citizens for Responsibility and Ethics in Washington tells the paper.
The newspaper's editorial page called the pardon "a breathtaking abuse of discretion that smells of cheaply bought political favoritism."
Excerpts from article:
Alfred Boozer, 50, a security guard at the Museum of Modern Art, said he lost his money - and his marriage - after he bought a Toussie house in Staten Island.
"I think Bush stinks anyway," said Boozer, who now rents a studio in Queens.
Beverly Sanchez, 42, a mom of three who bought her Middle Island, L.I., house for $157,000 from Toussie in 1997, was horrified to learn of the pardon. "We wanted the American Dream. We wanted the house, we wanted the white picket fence - and instead, we got nothing but heartache," not to mention floods and mold.
FULL DAILY NEWS ARTICLE AT THIS LINK
White House rescinds pardon: story at this link.