Developer avoids prison but pays 16 million in restitution
Having once been accused of mortgage fraud reaching upward of $500 million, prominent regional developer Robert “Bob” Morgan was sentenced Friday to no jail time and no federal parole. He was …
Developer avoids prison but pays 16 million in restitution
Having once been accused of mortgage fraud reaching upward of $500 million, prominent regional developer Robert “Bob” Morgan was sentenced Friday to no jail time and no federal parole.
He was also ordered to pay more than $16.3 million in restitution to resolve the civil and criminal charges against him. Morgan, 65, has already made that payment.
The culmination of what was once touted as one of the region’s largest-ever mortgage fraud prosecutions ended with far more questions than answers. Prominent among those questions is: Were serious crimes committed, and, if so, by who? Morgan earlier this year pleaded guilty to a single fraud felony for conspiring to submit false information to ESL Bank for a loan.
“I do believe that the record supports a conclusion that ... this was not isolated, the crime of conviction,” U.S. District Judge Elizabeth Wolford told Morgan at his sentencing. “On the other hand, the allegations in this indictment were never tested and that is unfortunate in many respects, because you never had the opportunity to present defenses to the allegations. They were never tried before a jury of your peers.”
Morgan and three co-defendants, including his son, were originally accused of swindling banks by falsifying information that secured loans far greater than would otherwise have been given. All three co-defendants pleaded guilty to much lesser fraud-related crimes and their pleas helped ensure they would not be incarcerated.
Morgan’s son, Todd Morgan, who had been a project manager for the family commercial development companies, also was sentenced Friday and will serve no time. He admitted to submitting false information for a construction loan.
The criminal case was upended by questionable conduct by prosecutors, who did not turn over evidence to the defense and did not conduct a thorough review of digital proof seized in searches of Morgan’s computers. Wolford once dismissed the indictment against the four, while allowing them to be indicted again.
Defense attorneys ultimately challenged the second indictment, alleging prosecutorial misconduct with the withholding of proof. While Wolford determined that the missteps in the first indictment were not willful, she said in court last week that she was growing more persuaded that there may have been prosecutorial misconduct with the investigation.
A hearing was scheduled about prosecutorial actions earlier this year when federal authorities decided to resolve the case with the plea agreements.
Morgan developed and purchased apartment buildings across the state and elsewhere, and also was heavily involved with commercial projects in Rochester before his arrest. Nearly 30 family members, friends, and community leaders wrote letters to Wolford supporting Morgan, including Bob Duffy, who previously served as Rochester’s mayor and the state’s lieutenant governor.
Morgan, Duffy wrote, has been “a catalyst for development and change in Rochester through projects that have helped vitalize our city, create jobs and wealth for the workers that built them, increase city downtown living, and added overall greatly to our economy.”
Morgan, Duffy wrote, “is universally respected by other developers and leaders, and I never heard a word of criticism or any type of accusation of inappropriate behavior before or after the case that stands before you today.”
On Friday, Morgan told Wolford: “I accept full responsibility for my actions, and I assure the Court that I will not engage in this kind of conduct in the future. I sincerely regret my actions and apologize to anyone who my wrongful conduct has impacted.”
Morgan was the victim of a shooting at his family’s fish market in 1991, a crime that left Morgan paralyzed from the waist down.
“There are many people that go through life and go through what he experienced with his injury that would just give up or just crawl into a hole and not try to serve their community,” his attorney, Joel Cohen, said in court Friday. “He chose a different path.”
Wolford commended Morgan, saying, “There is no question that you have made significant contributions to this community and other communities.”
Wolford later added: “But, let’s face it, your work hasn’t always ... been completely altruistic, either. You’ve also done very well for yourself.
“There is nothing wrong with that at all. ... The true beauty, in many respects, of this country is that, in theory at least, somebody should be able to work their way up and achieve the kind of success that you achieved. You can’t do it, obviously, though, by engaging in crimes. And you do stand convicted of one felony conviction.”
Morgan was also targeted by the federal Securities and Exchange Commission, which alleged he was on the cusp of a Ponzi scheme as he tried to repay developers who provided money for his projects. Morgan has since repaid almost $66 million to the investors, the total amount owed.
There has been no record that the investors had complained to the SEC. Ultimately, Morgan pleaded guilty to malfeasance with a single loan.
“In September 2016, Morgan, along with one or more co-conspirators, caused ESL Federal Credit Union to issue a construction loan based on inaccurate information regarding the construction contract price,” according to the U.S. Attorney’s Office. “Morgan saw and was aware of documents reflecting inaccurate information and agreed, along with one or more co-conspirators, for that information to be submitted to ESL to obtain a larger amount of the construction loan than what would have otherwise been supported by the actual figures.” Morgan has repaid that loan as well.
Wolford had planned to continue an investigation into whether there was prosecutorial misconduct, but determined last week that any investigation would be handled internally at the U.S. Attorney’s Office.
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