Mortgage Fraud, COVID Loan Fraud Admitted By Toms River Man

CAMDEN, NJ — A Toms River man has admitted to taking part in a multimillion-dollar mortgage fraud scheme and fraudulently obtaining more than $1.8 million in small business loans offered during the COVID-19 pandemic, federal authorities said Monday.

Mendel Deutsch, 39, of Toms River, pleaded guilty on Nov. 13 before U.S. District Judge Edward S. Kiel to one count of bank and wire fraud conspiracy and one count of wire fraud, the U.S. Attorney's Office said.

Deutsch's plea is the second in the case. Joshua Feldberger, 43, of Howell, pleaded guilty on Oct. 22 before Kiel to one count of bank fraud conspiracy.

Authorities say Deutsch and Feldberger conspired with a third man, Arthur Spitzer, in June 2020 to make it appear as if Spitzer owned three properties in Brooklyn, New York, and agreed to sell them to Deutsch, who obtained a $4.5 million mortgage loan in connection with the transaction.

Feldberger facilitated the fraudulent transaction as the owner of the settlement company that handled the transaction, authorities said.

The three created and sent letters stating that Deutsch had deposited significant funds into escrow toward the transaction, when in reality he had not; they created fake documentation purportedly transferring control of the properties to Spitzer; and they lied to the mortgage lender by stating that the settlement company had received more than $2 million from Deutsch at closing, which led the mortgage lender to fund the loan, authorities said.

Deutsch, Feldberger and Spitzer then used the mortgage loan proceeds to fund Deutsch’s down payment, which he had supposedly already provided, authorities have said.

Deutsch, Feldberger and Spitzer, 38, also from Toms River, were indicted in the scheme in September 2024. Authorities have alleged Spitzer identified properties that had either no mortgages or mortgages well below the property’s market value, then obtained mortgage loans secured by those properties and forged documents to make it appear control of the properties had been transferred to him.

The loan proceeds were disbursed to bank accounts controlled by Spitzer or were used to otherwise benefit Spitzer, such as to pay off his debts, and then he allowed the loans to default by not making the required payments, leaving the true property owners subject to foreclosure and eviction, authorities have alleged.

The charges are still pending against Spitzer, the U.S. Attorney's Office said.

Deutsch's guilty plea on the COVID-19 loan fraud resulted from him seeking and receiving $1.8 million in loans under the Economic Injury Disaster Loans of up to $2 million that were made available to eligible small businesses were experiencing substantial financial disruption due to the pandemic.

To obtain an EIDL loan, a qualifying small business was required to submit an application and provide information on its operations, including the number of employees and revenues or expenses.

Deutsch obtained EIDL loans for businesses that had little or no operations by submitting loan applications that included false statements about the applicant companies’ number of employees, revenues, cost of goods sold, or lost rents, authorities said.

Deutsch, who is scheduled to be sentenced on March 16, faces up to 30 years in prison and a $1 million on the counts of bank fraud conspiracy and bank and wire fraud conspiracy. He faces up to 20 years in prison and up to a $250,000 fine on the count of wire fraud.

Feldberger is scheduled to be sentenced on Feb. 23.