Ft Lauderdale woman and ex-husband on trial in $50M fraud case


By Paula McMahon

A Fort Lauderdale grandmother and her ex-husband, who once turned government informant on Genovese organized crime associates, are hoping a jury will clear them of federal charges that they operated a $50 million mortgage fraud conspiracy.
Domenico Rabuffo, 77, and former wife Mae Rabuffo, 75, divorced many years ago but prosecutors say they maintained a criminal partnership right up until they were arrested in January.
Mrs. Rabuffo, who is free on a $1 million bond, appeared to be the "moneybags" who controlled the purse strings for the alleged fraud, one witness told investigators.
Federal prosecutors allege that much of that money came from her ex-husband, who served time for a prior fraud-related conviction and has a "long-standing habit of concealing assets in the name of his ex-wife."
Prosecutors say the couple were the masterminds behind a complex mortgage fraud scheme involving a failed upscale property development known as Hampton Springs in Cashiers, N.C., with beautiful views of the Great Smoky Mountains.
The two, with several co-conspirators, used shell companies to acquire the land, then recruited straw buyers to purchase the lots, financing the purchases with fraudulently obtained loans from several banks, according to investigators.
Both are charged with one count of conspiracy to commit bank and wire fraud and several charges of bank fraud. If convicted, they face up to 30 years in prison per count — effectively a life sentence, given their ages, prosecutors said.
Domenico Rabuffo made headlines in the late 1980s and early 1990s after his business partner Irwin Schiff was murdered in a restaurant on Manhattan's Upper East Side.
Investigators at the time said that Schiff and Rabuffo had ties to the Genovese mafia family and that Schiff's death was linked to a fraud the two were perpetrating together.
Rabuffo began cooperating with prosecutors, entered the witness protection program for a time and served a brief federal prison term after pleading guilty to a fraud-related charge, according to court records and newspaper accounts at the time.
Rabuffo denied he had any mob ties in an interview with the St. Petersburg Times in 2008.
Rabuffo, also known as Dom, lived in one of the penthouses at the Coconut Grove Ritz-Carlton until late last year when the bank foreclosed on his unit, according to his lawyer.
The Rabuffos and several other suspects were arrested earlier this year in the mortgage fraud case. A few co-defendants have pleaded guilty. The Rabuffos, as well as two other people — Raymone E. Olivier, 52, of Land O' Lakes, and Curtis Allen Davis, 51, of Tampa — pleaded not guilty and went to trial.
The Rabuffos' brochure touted the North Carolina project as a "unique real estate investment opportunity" and recruited straw buyers with offers that they could make money with no out-of-pocket cost.
Mae Rabuffo, who split her time between her homes in Fort Lauderdale's Imperial Point neighborhood and Long Island, N.Y., drew attention in the small North Carolina town when she flew in on a private plane to sign documents, witnesses said.
Two of the three Hampton Springs subdivisions appeared on official property records under the names "Mae Rabuffo Subdivisions Numbers 1 and 2."
The developers started building private roads and fancy houses but the real goal was to commit fraud and rip off the banks, said prosecutors Dwayne Williams and Jerrob Duffy.
In return for lending their names and credit-worthiness to obtain the loans, those straw buyers were paid $12,500 each and offered the chance to make more money, prosecutors said.
"What you saw was a merry-go-round of fraud," Duffy told jurors in closings Tuesday morning. "Lies got pumped in, money got pumped out."
The fraudulently obtained loan money was funneled through the Rabuffos' bank accounts to them and their co-defendants, prosecutors alleged.
In his closing argument to jurors on Monday, Domenico Rabuffo's lawyer Neal Lewis said that prosecutors had not come close to proving their case against his client.
"This was a substantial and real project," Lewis said, telling jurors that the developers spent millions of dollars building the project, which stalled when they ran out of money.
He said Rabuffo pleaded guilty close to 30 years ago when he actually committed a crime and has been a legitimate businessman ever since.
"This was not a scam," Lewis said. "This was an investment that people were making because they were trying to make money."
In his closing argument, also Monday, Mae Rabuffo's lawyer Joseph Corozzo told jurors that she was a victim who was being used by her former husband and that she had no knowledge of the fraudulent loans scam.
Her lawyer said her ex-husband lived two lives: One of those lives involved Domenico Rabuffo living with his new fiancee in a Coconut Grove penthouse, and the other involved humoring his ex-wife so she would do what he wanted, Corozzo said.
"She allows Domenico to manipulate her and that's why she's sitting there now," Corozzo told the jury. "Mae is not the moneybags here … [she] is a victim here more than anybody else."
According to the indictment filed earlier this year, the fraud began in 2003 and went on until 2008.
One witness told investigators that Rabuffo introduced him to Mae Rabuffo at her Fort Lauderdale home. According to court records, Rabuffo explained that "Mae Rabuffo was his partner with the money" and that "even though he and Mae Rabuffo were divorced, they invested in real estate together."
Rabuffo then showed the witness a bank account with a balance of about $9 million in his ex-wife's name, investigators said, and explained that the couple earned the money when they helped develop the Ritz-Carlton in Coconut Gove and they had the money to develop the North Carolina property.
Domenico Rabuffo has been locked up in the federal detention center in downtown Miami since his arrest in January. A judge ordered him detained, finding that he was a flight risk because of the combination of his criminal history, the lengthy sentence he could face, his significant assets and history of hiding money, and his frequent overseas travel.
In court hearings earlier this year, prosecutors said Rabuffo bragged in 2012 that he had "billions of dollars coming in" from a metal-trading company that he operates, though he later told court officials that the company wasn't really making any money.
Rabuffo, who comes to court in a wheelchair, has argued unsuccessfully for his release prior to trial, saying that he needed a psychiatric evaluation and treatment for his diabetes, skin cancer and other ailments.
Jurors deliberated for several hours Tuesday without reaching a verdict. They will resume deliberating on Wednesday.