OCEAN TOWNSHIP — Four years ago, after their nephew was arrested in a massive bank fraud, Joseph and Terry Dwek went to court alleging their signatures had been forged on a $1.5 million mortgage. They claimed Solomon Dwek — who secretly became a federal informant after his arrest in the largest federal corruption sting in New Jersey history —...
Failed real estate developer Solomon Dwek is led out of the courtroom after pleading guilty to misconduct by a corporate official in this October 2009 photo.
OCEAN TOWNSHIP — Four years ago, after their nephew was arrested in a massive bank fraud, Joseph and Terry Dwek went to court alleging their signatures had been forged on a $1.5 million mortgage.
They claimed Solomon Dwek — who secretly became a federal informant after his arrest in the largest federal corruption sting in New Jersey history — had taken out the loan on their Ocean Township home without their knowledge.
Their case seemed buttressed by Solomon Dwek’s open acknowledgment he had cheated his uncle out of more than $60 million in fraudulent real estate deals.
But a federal bankruptcy judge found today that Joseph Dwek decided to keep the issue of the loan "in the family," and never tried to repudiate it until he was on the hook for the money after his nephew’s arrest.
Attorneys who represented Sun National Bank in the long-running lawsuit said it was clear Solomon had acted with the authority of his uncle. "As long as the Dweks were profitable, all was good," said Joseph Blum of Philadelphia, one of the attorneys. "But when the arrangement turned not profitable, they tried to argue it wasn’t their loan; it’s a forgery, and we’re not obligated to pay."
James Kim, the lawyer for the Dweks, declined comment. "I really haven’t had time to digest it," he said.
Dwek and his uncle were real estate partners before Solomon was arrested in May 2006, after he went to a drive-in window at the PNC Bank in Eatontown and deposited a $25 million check on a closed account — transferring the money out as soon as it was credited to him. Then he tried to do it again.Solomon Dwek’s arrest arrest led to the collapse of his $400 million real estate empire, which a federal bankruptcy trustee later determined was a massive Ponzi scheme fueled by millions in personal and bank loans, often taken out on properties that did not exist, or which Dwek already owned.
While dozens of creditors were trying to sort out the financial morass, Dwek, the son of a rabbi, agreed to cooperate with federal prosecutors in an unrelated sting that ultimately led to the arrests of more than 44 people, including state legislators, mayors, rabbis and others, on charges of corruption and money laundering.
Joseph and Terry Dwek filed their lawsuit before the sting operation came to light. They claimed their nephew took out a $1.5 million mortgage on their summer home along the Jersey Shore in December 2001 by forging their names on the documents. Payments were made on the loan until Solomon Dwek was arrested.
Attorneys for the Dweks said the loan was invalid, and just another fraud perpetrated by their nephew.
But U.S. Bankruptcy Judge Kathryn Ferguson in Trenton said it was clear Joseph "was quite casual" about the loan transactions he entered into with his nephew, and was "content to put all of his faith in Solomon" when it came to real estate transactions.
The judge noted Joseph Dwek had called Solomon his hero when it came to real estate transactions, which appeared at first to be profitable.
"It became readily apparent at trial that whether or not Joseph had authorized Solomon to obtain this loan, once the existence of the loan came to his attention, he decided to keep the matter in the family," concluded the judge, finding the Dweks liable for the mortgage.
Attorneys for Solomon Dwek could not be reach for comment.