BUFFALO, NY (WROC) — Rochester developer Bob Morgan, his son Todd Morgan, and two other men have been indicted in a 114-count federal fraud case related to Morgan Management.
The indictment alleges that the Morgans along with Frank Giacobbe, who owned financial company Aurora Capital Advisors, and Morgan Management director of finance Michael Tremiti worked with Bob’s nephew Kevin Morgan, Patrick Ogiony, and Scott Cresswell to defraud financial institutions and government enterprises.
Wednesday evening, News 8 learned that Morgan now faces civil charges from the SEC which accused Morgan of running an investment fund like a “Ponzi scheme.” According to MarketWatch the SEC says Morgan was offering investors 11% return on their money. But, instead used the money as a “slush fund” to pay previous investors.
In the documents, officials write:
The Commission brings this emergency action to halt ongoing misconduct by Defendants in connection with a series of fraudulent private securities offerings, which Defendants have operated in a Ponzi scheme-like manner by using investor funds to make interest and principal redemption payments back to prior investors, and to cover up other mortgage fraud-related conduct.
In the criminal indictment, Bob Morgan faces 45 counts including wire fraud, conspiracy to commit wire and bank fraud, and money laundering conspiracy. In court Wednesday, he pleaded not guilty.
Federal prosecutors say members of the group lied to financial institutions about the company’s debt, construction costs, company income and expenses, and building occupancy to get larger loans and additional financial while pocketing the extra cash.
Among other accusations, members of the group are accused of lying on documents for loans for the following properties:
- Morgan Ellicott
- Rugby Square
- Avon Commons
- Rochester Village (located in Pennsylvania)
- Eden Square
- Villas of Victor
- Park Place of South Park
- Ellison Heights
- Union Square
- Links at Centerpointe
Along with the mortgage fraud scheme, prosecutors say Bob and Todd Morgan are accused of rigging an insurance fraud scheme. Investigators say the father and son worked to inflate repair bills for insurance claims to two different companies.
Speaking Wednesday, U.S. Attorney James P. Kennedy said the investigation into Morgan Management is ongoing. “We’re going to try and uncover every aspect of this fraud.”
Kevin Morgan, Ogiony, and Cresswell weren’t named in Wednesday’s indictment but have all pled guilty in separate cases. Last year, Morgan’s son and nephew were arrested with two other men, accused of misleading financial institutions in order to secure larger loans than needed for development properties.
Earlier this month, the former operating officer for Morgan Management, Scott Cresswell, admitted to charges of conspiracy to commit wire fraud.
As part of his plea, Cresswell said Bob Morgan directed him to take steps to inflate bills for insurance claims after the March 2017 windstorm. Cresswell also admitted to making fake documents to increase repair bills for properties in Indiana and Pennslyvania.
Morgan Management holds 92 development locations in New York along with a number of other developments in nine other states.
It’s not clear how the indictments could impact former Morgan Management properties. U.S. Attorney Kennedy urges residents to monitor the situation but says normal, daily operations haven’t been impacted at this time.
Statement from the City of Rochester
“The City is, of course concerned regarding the ongoing projects related to Mr. Morgan, and will continue to make sure he meets his obligations to our taxpayers. However, Rochester is poised for growth and has a robust development community. We will work with our business leaders to ensure that our City’s tremendous progress continues as we create more jobs; safer, more vibrant neighborhoods and greater educational opportunities.”
Statement from Monroe County Executive Cheryl Dinolfo’s office
“We are learning of the details of this matter at the same time the public is. Imagine Monroe has had no involvement with any of the projects listed in the indictment. Neither Monroe County nor Imagine Monroe have been contacted by investigators at any point. Simply put, the County is not involved, but will continue to monitor the legal process closely moving forward.”