The Morgan family is established as one of the largest apartment empires in America. But probably not for long.
Recently, prosecutors in New York allege that nearly $500 million in loans, obtained by Morgan executives and their network of brokers, knowingly overstated the income and occupancy of those apartments.
According to the Wall Street Journal, Morgan Management is rapidly shrinking in the wake of one of the largest mortgage fraud investigations in the last ten years.
Cezary Podkul and Peter Grant report that, because of the prosecution:
“Following guilty pleas by one family member and a mortgage broker, many of the creditors holding about $3 billion in Morgan’s debt are now pressuring the family to transfer the management of nearly all its properties, according to people familiar with the matter.”
“The Morgan family is close to shifting the management of about 33,000 apartment units—nearly all its inventory—to Harbor Group International, a Norfolk, Va., real-estate firm, according to some of the people familiar with the matter.”
The fraud allegations facing the inside operations at Morgan Management range from simple — They once allegedly turned on radios in empty apartments to make they seem occupied — to serious: “Morgan Management hired a new management firm named Grand Atlas Property Management to run the portfolio. But creditors weren’t happy, according to people familiar with the matter, because Grand Atlas had offices at the same address and was owned by former Morgan employees, although none of them were family members.”
Earlier this year, according to the U.S Attorney’s Office, Patrick Ogiony conspired with others to defraud financial institutions including Evans Bank, UBS Securities, MT Bank, Arbor Commercial Mortgage, SteepRock Capital, and Berkadia Commercial Mortgage by providing false information about apartment communities in several states that were owned by Morgan Management.
Ogiony is a former employee of Aurora Capital Advisors, a mortgage brokerage company owned and operated by Frank Giacobbe, who is also charged in the matter.
Court documents show that Ogiony conspired with Giacobbe, Kevin Morgan, Todd Morgan, and others, to broker mortgages on behalf of Morgan Management, a real estate management company that managed over 100 multifamily properties.
Kevin Morgan was employed as a vice president at Morgan Management, while Todd Morgan was employed as a project manager.