Earlier today, Barry Stephen Zornberg pleaded guilty at the federal courthouse in Central Islip, New York, to lying to federal investigators about his role in a million-dollar foreclosure rescue fraud scheme. The scheme ensnared at least 10 families, defrauding them of approximately $1.3 million in home equity and caused some of them to lose their homes.

Zornberg faces up to five years of imprisonment. As a part of the plea agreement, Zornberg has agreed to pay a total of $1,261,149.50 to the victims of the foreclosure rescue fraud scheme.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, New York Field Office, Federal Bureau of Investigation (FBI); and Philip R. Bartlett, Inspector in Charge of the New York Office of the United States Postal Inspection Service (USPIS).

“The defendant, a disbarred attorney, has now admitted to a judge that he lied to federal investigators about the role that he played in this fraud scheme, which took advantage of people who were looking to save their homes from foreclosure. A license to practice law is not a license to steal or lie,” stated United States Attorney Lynch. “We are committed to protecting our communities from the abuses of fraud. I would like to thank our partners at the Federal Bureau of Investigation and the United States Postal Inspection Service for their hard work on this important investigation.”

The foreclosure rescue fraud was perpetrated out of Empire Property Solutions LLC (Empire) in Bethpage, New York. Empire held itself out to be a home foreclosure rescue specialist operated by John Rutigliano and Kenneth Kiefer. On November 4, 2011, a federal grand jury returned an indictment charging Rutigliano and Kiefer with conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, and two counts of wire fraud, in violation of Title 18, United States Code, Section 1343. Rutigliano and Kiefer encouraged distressed homeowners to “refinance” their homes with Empire, when, in reality, the homeowner victims were tricked into transferring title in their homes to straw buyers and paying large fees to Empire. Zornberg conducted real estate closings and provided other legal services to Empire. Rutigliano and Kiefer used the escrow accounts of Zornberg’s law firm to hold and transfer funds during the scheme. Zornberg falsely told federal investigators that he advised the victims to not participate in the scheme when, in fact, he encouraged the victims to sign over their homes to Rutigliano and Kiefer, thereby losing title to their homes. Kiefer has since pleaded guilty to the charges.

The guilty plea proceeding took place before United States Magistrate Judge William D. Wall.

The defendant’s sentencing has not yet been scheduled.

The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.