Agents in home scam to get new sentences
Published in the Asbury Park Press 02/10/05
By NANCY SHIELDS
COASTAL
MONMOUTH BUREAU
A
new sentencing date will be set next month for two real estate agents convicted
of defrauding homeowners in a massive land-flipping scam in Asbury Park and
other towns in the late 1990s.
The U.S. Attorney's Office in Newark will
hold a status conference March 16 to set the new date for Donna Pepsny, Atlantic
Highlands, and Irene DiFeo, Old Bridge, who had part of their convictions
overturned by a federal appeals court last August. They are to be resentenced on
conspiracy convictions that were not overturned.
The 3rd Circuit Court of
Appeals panel found fault with an answer the federal judge gave to jurors during
deliberations in the 2002 case. As a result, the panel reversed the wire fraud
convictions against the women -- in Pepsny's case, five counts, and in DiFeo's,
four
counts.
Michael Drewniak, spokesman for the U.S. Attorney's
Office in Newark, said a decision on retrying the wire fraud charges has not yet
been made.
The case grew out of a 1997 Asbury Park Press investigation
detailed in the paper's "House of Cards" series.
In June 2003, U.S.
District Court Judge Alfred M. Wolin sentenced Pepsny to 37 months in prison and
DiFeo to 42 months for their roles in selling run-down homes at artificially
inflated prices to first-time, working-class home buyers.
Both women
appealed, and the appellate panel ruled last summer that Wolin had given the
jurors an incorrect answer that could have affected the verdict.
The
judges said the jurors asked if the defendants could be liable for substantive
crimes committed by their co-conspirators before the women joined the
conspiracy.
Wolin told them the defendants could be liable but the higher
court said the judge should have said the defendants could not be convicted of
offenses that happened before they became
involved.
The appeals panel
said the government had not demonstrated that the error had not contributed to
the jurors' findings on the wire fraud counts, and for that reason those
convictions were reversed.
DiFeo and Pepsny were the only participants in
the fraud to stand trial. Eighteen others pleaded guilty to charges. Betty Ann
Demola, a former executive at Walsh Securities, the now defunct Parsippany
mortgage company that approved the fraudulent mortgages, is awaiting
trial.
Pepsny and DiFeo maintained during the trial they did not know
they were participating in a fraud when they worked with real estate businessman
William Kane, who sold most of the overpriced homes; Pepsny's husband, Richard,
who sold a few homes; lawyers; and mortgage lenders.
Victims testified
they had been lured by signs of "no money down, no closing costs," then being
surprised at closings by sales contracts with inflated purchase prices, as well
as phony down payments, balloon mortgages at high interest rates and second
mortgages they could not begin to afford to pay.
The scheme was for the
lawyers, real estate agents, appraisers and mortgage company participants to
make money by inflating the prices of the homes well above their values and
submitting false buyer information and share the proceeds of inflated mortgage
loans.
Often, the buyers moved into homes that had been superficially
fixed up and found themselves with no money to make
repairs.
