Mendel Deutsch of Toms River, New Jersey, has pleaded guilty to one count of bank and wire fraud conspiracy and one count of wire fraud for his role in a brazen commercial mortgage fraud scheme in Brooklyn.
Deutsch pleaded guilty in November, just a few weeks after one of the co-conspirators, Joshua Feldberger of the title insurer Universal Abstract, pleaded guilty to one count of bank fraud conspiracy.
The Department of Justice accused Deutsch and Feldberger of assisting in a scheme with Arthur Spitzer to buy and sell properties and obtain mortgages on properties they did not own.
Prosecutors alleged Spitzer orchestrated the scheme in 2019 and 2020 by identifying properties in New Jersey or Brooklyn without mortgages or mortgages below the property’s market value. The trio would make it appear like Spitzer owned three properties in Brooklyn and had agreed to sell them to Deutsch, who then took out a $4.5 million loan on the transaction, according to the DOJ.
The scheme involved multiple bad acts: The defendants allegedly created and sent letters stating that Deutsch had deposited escrow funds to close on the transaction, created fake documents showing the properties transferred to Spitzer and lied to the mortgage lender, stating Universal received more than $2 million from Deutsch at closing, causing the lender, Connect One Bank, to fund the loan.
Deutsch’s plea comes amid a crackdown by the Department of Justice and the Federal Housing Finance Agency into mortgage fraud. The agencies are targeting deals in which the borrowers sold properties to related parties or inflated building financials to obtain larger loans than they otherwise would have received.
But the scheme at the heart of the allegations against Spitzer, Deutsch and Feldberger is particularly bold since Spitzer and Deutsch never owned the properties. Deutsch even used the fraudulent loan proceeds to fund an actual down payment on the same properties.
(The Brooklyn properties were owned by entities tied to Dahlia Kalter, civil court records show. Kalter’s husband is Mark Nordlicht, who ran the infamous hedge fund Platinum Partners and was found guilty of securities fraud by a jury in New York federal court and given six months of house arrest.)
Deutsch also fraudulently obtained about $1.8 million of government loans intended for small businesses during the pandemic. The businesses tied to these loans had little or no operations. He also submitted false statements about the number of employees, revenues, cost of goods sold and lost rents, according to prosecutors.
At a hearing in November in which Deutsch pleaded guilty, he told U.S. Judge Edward Kiel in Camden, New Jersey, that the highest level of education he had completed was the eighth grade. He stated his last job was as a salesman selling doors and hardware, which he held for 18 years.
Deutsch, 39, faces a maximum sentence of up to 50 years and a maximum fine of $1.25 million, although he will likely be sentenced to far less. Deutsch is scheduled to be sentenced on March 16, 2026.
Spitzer has pleaded not guilty.
An attorney for Deutsch did not return a request for comment.
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