Hauppauge Man Admits $1.3M Foreclosure Scam

A disbarred attorney from Hauppauge has admitted scamming 10 families out of $1.3 million in home equity during a foreclosure rescue fraud scheme that caused some victims to lose their homes.

Barry Stephen Zornberg pleaded guilty Tuesday before Judge William Wall at Central Islip federal court to charges of lying to federal investigators.

“A license to practice law is not a license to steal or lie,” Loretta Lynch, U.S. Attorney for the Eastern District of New York, said in a statement.

Prosecutors said the 54-year-old man conducted real estate closings and allowed Bethpage-based Empire Property Solutions, LLC, a company billed as a home foreclosure rescue specialist, to use his law firm’s escrow accounts 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 the firm, thereby losing title to their homes, authorities said.

Victims were told they would “refinance” their homes with Empire, when, in reality, the homeowners were tricked into transferring title in their homes to straw buyers and paying large fees, according to investigators.

John Rutigliano and Kenneth Kiefer, who ran the company, were indicted in 2011 on charges of wire fraud and conspiracy to commit wire fraud. Kiefer has since pleaded guilty. Rutigliano pleaded not guilty and is awaiting trial.

Zornberg faces up to five years in prison. He agreed to pay a total of $1,261,149.50 to the victims. His sentencing has not yet been scheduled.