A former councilman and failed mayoral candidate for the city of Kearney, New Jersey, will spend the next five years in prison after pleading guilty for his role in a $13 million mortgage fraud scam that involved using straw buyers to buy condominiums from financially distressed developers.
According to the U.S. Attorney’s Office for the District of New Jersey, John Leadbeater, 59, received a sentence of 60 months for conspiracy to commit wire fraud.
Per documents filed in this case and statements made in court, Leadbeater and several conspirators identified condos in Wildwood and Wildwood Crest, New Jersey that were “overbuilt” by developers, and then recruited straw buyers from New Jersey, New York, Ohio, Arkansas, and California, to purchase those properties.
According to the U.S. Attorney’s Office, those straw buyers had good credit scores, but lacked the financial resources to qualify for the mortgage loans.
Leadbeater and his conspirators allegedly created false documents, including loan applications with fraudulent financial and employment information, to make the straw buyers appear more credit-worthy and convince lenders to make mortgage loans for the condos.
Once the loans were approved, Leadbeater and his conspirators created and signed fraudulent closing documents to induce the mortgage lenders fund the loans.
Once the mortgage lenders sent the loan proceeds, Leadbeater and his conspirators took a portion of the money, having funds wired or checks deposited into various accounts that they controlled.
Leadbeater and his conspirators also gave a portion of the money to the other members of the conspiracy for their roles, the U.S. Attorney’s Office stated,
According to the U.S. Attorney’s Office,Leadbeater admitted to personally participating in fraudulent activity related to nine properties in Wildwood and Wildwood Crest.
Leadbeater also admitted causing mortgage lenders to fund $4,711,557 worth of mortgages based on the bogus loan applications and closing documents.
Leadbeater actually pleaded guilty to the charges against him last year, according to NJ.com, but he received his sentence this week.
The NJ.com article stated that Leadbeater is a former Kearny councilman, serving from 1990 to 1999. Additionally, the article stated that Leadbeater made three unsuccessful runs to serve as Kearney mayor, most recently losing to Al Santos in 2009.
In addition to his sentence, Leadbeater was also sentenced to five years of supervised release.