10 Accused Of Mortgage Fraud At PR Coastal Resort

JILL LASTER

SAN JUAN, Puerto Rico (AP) — A developer and nine other people, including a former salsa singer, have been charged in an alleged $14 million mortgage fraud in Puerto Rico, federal officials said Tuesday.

The suspects are accused of a scheme in which buyers allegedly took out loans using fake documents overstating the value of a dozen Spanish-style mansions in the ritzy Palmas del Mar coastal resort community in Humacao, in southeastern Puerto Rico.

A federal indictment charges developer Joseph McCloskey Diaz split the difference with the buyers, the loans went unpaid and the properties passed into foreclosure.

"Now the banks are stuck with these houses" that are not worth as much as the mortgages, FBI spokesman Harry Rodriguez said.

A federal grand jury indicted the group Friday on 33 counts including bank fraud, money laundering and submitting false statements to a financial institution.

Nine people were arrested Tuesday morning, and McCloskey flew in from South Florida and turned himself in, according to the U.S. attorney's office.