AP source: NY fraudster tried to get witness slain (AP)

NEW YORK – A man convicted of leading a $100 million mortgage fraud scheme tried from behind bars to get a key witness against him killed, plotting in a prison visiting area with an undercover investigator posing as a hit man, a person familiar with the case said Thursday.

Former AFG Financial Group Inc. President Aaron Hand was expected to be arraigned in a Manhattan court Thursday on charges of attempted murder and conspiring to commit murder, said the person, who spoke on condition of anonymity to discuss the case before the arraignment.

Manhattan District Attorney Cyrus R. Vance Jr.'s office declined to comment, but he was expected to make an announcement later in the day. Hand was in custody and couldn't be reached; his former lawyer said through his office he hadn't been aware of the new charges and declined to comment.

The witness, whom the person wouldn't name, was one of several who cooperated with prosecutors to outline a sprawling scheme in which a cast of corrupt mortgage brokers and lawyers pocketed money that banks lent people to buy real estate, duping both sellers and buyers along the way.

Some 27 people have been convicted or pleaded guilty. Hand, 39, was convicted in July 2010 of racketeering and other charges. He was sentenced in September 2010 to 8 1/3 to 25 years in prison.

Fuming that the witness was a "rat," Hand railed about the case and his conviction in his first meeting with the undercover investigator, in August at Coxsackie Correctional Facility in New York's Hudson Valley, according to the person familiar with the case.

"He wants revenge, absolutely," the person said. Hand told the supposed hit man to kill the witness' wife and children as well if they were there when the slaying happened, the person said.

Authorities had gotten a tip earlier that Hand was interested in arranging a hit, and they got an intermediary to refer Hand to the undercover investigator, the person said.

As a start, Hand arranged for an associate to give $150 to the supposed hit man at a Manhattan diner last month, money that was intended to buy a gun, the person said. The associate wasn't aware of the alleged plot, thinking instead that he was helping Hand bribe a prison guard who was giving him problems, the person said.

Then the undercover investigator visited Hand again Sept. 15, saying he'd gotten the gun, had followed the witness a few times in preparation and was ready to go — and there would be no turning back once he left the prison that day, the person said.

Hand enthusiastically told him to do it and agreed to a $2,000 fee, according to the person.

Hand could face 25 years to life in prison if convicted of the new charges, first reported Thursday by The Wall Street Journal.

Garden City, N.Y.-based AFG Financial Group found real estate owned by people in financial trouble and then found straw buyers who had good credit — but needed cash — to front for the purchase of the property, prosecutors said. The buyers were told the deals were investment opportunities that would help people save their homes, earn them and investors a healthy return, and cost them nothing but their signatures.

The conspirators would then get banks to finance the real estate purchases, with the help of inflated property appraisals, phony loan qualification packages and forged W-2 forms, pay statements and bank documents. Once the deals closed, the conspirators simply took the money, without paying the seller or anyone else, prosecutors said.

The straw buyers were left with bad credit and no investment return, and the lenders foreclosed on the sellers' properties.

In some cases, the banks had already sold investments based on the worthless mortgages. Cheated banks and lenders included New Century Mortgage Corp., which lost more than $30 million, and Countrywide Home Loans Inc., which was taken for about $8 million, prosecutors said.

AFG Financial Group was not related to American Financial Group Inc., of Cincinnati, an insurance company that goes by AFG.

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