A New Jersey real estate investor admitted to a multimillion-dollar mortgage fraud scheme, COVID-19 relief loan fraud, and money laundering. The case is a reminder that sentencing is not the end of the federal process — it is where BOP planning, release credits, restitution, forfeiture, and federal prison strategy become critical.
Quick Answer
Arthur Spitzer, 39, of Toms River, New Jersey, pleaded guilty on August 19, 2026, to one count of bank and wire fraud conspiracy and one count of money laundering. Federal prosecutors say the case involved a fraudulent $4.5 million mortgage transaction tied to Brooklyn real estate, additional fraudulent loan schemes with losses exceeding $10 million, and approximately $1.8 million in fraudulently obtained Economic Injury Disaster Loans.
Spitzer is scheduled to be sentenced on December 21, 2026. Before sentencing, defendants in fraud and money-laundering cases should carefully review the Presentence Investigation Report, restitution, forfeiture, loss amount, RDAP eligibility, First Step Act eligibility, federal prison designation, and release planning.
Federal fraud cases often begin with financial documents, loan files, real estate closings, escrow letters, bank records, business applications, and government benefit forms. But once a defendant pleads guilty, the focus shifts quickly from the alleged scheme to the sentence and the Bureau of Prisons.
That shift matters. A person facing sentencing for mortgage fraud, EIDL fraud, wire fraud, bank fraud, or money laundering may be thinking only about the guideline range. Families may be thinking only about how many months the judge will impose. But the practical questions are broader:
- Where will the person be designated?
- Will the person qualify for a federal prison camp?
- Can the person earn First Step Act credits?
- Can RDAP reduce the sentence?
- How will restitution and forfeiture affect prison life?
- How much time will actually be spent in secure custody?
- When can halfway house or home confinement begin?
- Can business and real estate issues be handled without violating BOP rules?
Those questions should be addressed before sentencing when possible — not after the person has already arrived at federal prison.
What Did the DOJ Say Happened?
According to the U.S. Attorney’s Office for the District of New Jersey, Spitzer admitted participating in a multimillion-dollar mortgage fraud scheme and fraudulently obtaining more than $1.8 million in federal Economic Injury Disaster Loans.
The government says that in June 2020, Spitzer conspired with Mendel Deutsch and Joshua Feldberger to make it appear as though Spitzer owned three Brooklyn, New York properties and had agreed to sell them to Deutsch. Deutsch then obtained a $4.5 million mortgage loan connected to the transaction. Feldberger, who owned the settlement company handling the transaction, allegedly facilitated the closing.
Federal prosecutors said the defendants created and sent letters stating that Deutsch had deposited significant funds into escrow. In reality, according to the government, he had not. Prosecutors also said the defendants created false documents purporting to transfer control of the properties to Spitzer and falsely represented to the mortgage lender that the settlement company had received more than $2 million from Deutsch at closing.
The government says the mortgage lender funded the loan, and the defendants then used mortgage loan proceeds to fund Deutsch’s down payment — money he had supposedly already provided.
The COVID-19 EIDL Fraud Allegations
The guilty plea also involved COVID-19 relief fraud. Prosecutors said that in 2020 and 2021, Spitzer fraudulently obtained approximately $1.8 million in Economic Injury Disaster Loans intended for small businesses affected by the pandemic.
The EIDL program was designed to provide emergency financial assistance to eligible small businesses suffering economic harm from COVID-19. According to the DOJ, applicants had to provide information about business operations, including employees, revenue, expenses, and other qualifying information.
Prosecutors said Spitzer obtained EIDL loans for businesses that had little or no operations by submitting false statements about employees, revenue, cost of goods sold, or lost rents. The government also said he laundered some of the EIDL fraud proceeds.
What is EIDL fraud?
EIDL fraud involves false statements or fraudulent conduct connected to Economic Injury Disaster Loans. In COVID-19 relief cases, prosecutors often focus on whether the business was real, whether it had qualifying operations, whether employee counts and revenue were accurate, how loan proceeds were used, and whether funds were moved or laundered after disbursement.
The Plea, Restitution, and Forfeiture
Spitzer pleaded guilty to one count of bank and wire fraud conspiracy and one count of money laundering. The bank and wire fraud conspiracy count carries a maximum penalty of 30 years in prison. The money laundering count carries a maximum penalty of 10 years in prison.
Maximum penalties are not the same thing as the likely sentencing range. In most federal fraud cases, the sentencing guideline calculation may be heavily influenced by loss amount, role in the offense, number of victims, sophisticated means, obstruction issues, acceptance of responsibility, criminal history, restitution, and forfeiture.
| Case Issue | Reported Detail |
|---|---|
| Defendant | Arthur Spitzer, 39, of Toms River, New Jersey |
| Guilty plea | August 19, 2026 |
| Counts | Bank and wire fraud conspiracy; money laundering |
| Mortgage transaction | $4.5 million mortgage loan connected to Brooklyn real estate |
| Additional loan schemes | Spitzer agreed he was responsible for losses from five additional fraudulent loan schemes in 2019 and 2020 totaling more than $10 million |
| EIDL fraud | Approximately $1.8 million in fraudulently obtained COVID-19 Economic Injury Disaster Loans |
| Restitution | Full restitution, including $1,000,000 to the true owner of the Brooklyn properties and at least $1,845,400 to the SBA, subject to applicable credits |
| Forfeiture | $2,350,000 total agreed forfeiture |
| Sentencing date | December 21, 2026 |
Why Sentencing Preparation Matters in Federal Fraud Cases
In a case involving mortgage fraud, COVID-relief fraud, and money laundering, sentencing preparation is not just about asking for mercy. The sentencing record can affect the Bureau of Prisons in practical ways.
The Presentence Investigation Report may influence:
- Security-level scoring;
- Federal prison designation;
- Camp eligibility;
- Financial Responsibility Program issues;
- Restitution expectations;
- RDAP eligibility;
- First Step Act eligibility;
- Program needs;
- Medical and mental-health documentation;
- Release planning;
- Supervised release conditions.
Before Sentencing Warning
Defendants in fraud cases should not wait until they are inside the BOP to start planning. By then, the PSR may already be locked in, RDAP documentation may be missing, restitution and forfeiture issues may be poorly explained, business issues may be unresolved, and designation opportunities may have passed.
Can Someone Convicted of Fraud Earn First Step Act Credits?
Possibly. Many fraud and money-laundering offenses are not automatically excluded from First Step Act earned time credits, but eligibility depends on the exact statute of conviction, judgment, immigration status, risk level, detainers, discipline history, and BOP records.
BOP’s public First Step Act overview says eligible inmates can earn time credits toward prerelease custody, while certain disqualifying offenses make prisoners ineligible. The BOP’s disqualifying-offense table should be reviewed carefully in every case.
Are mortgage fraud and EIDL fraud automatically disqualified from FSA credits?
Not necessarily. A fraud conviction does not automatically mean the person is barred from First Step Act time credits. The exact statute of conviction, judgment, BOP eligibility decision, risk level, immigration status, detainers, and discipline record must be reviewed. Families should not assume eligibility or ineligibility without checking the actual conviction and BOP records.
Related Prison Law Firm resources:
- First Step Act Time Credit Calculator
- How to Calculate First Step Act Time Credits
- 130+ First Step Act Programs That Earn Federal Prison Time Credits
- Can FSA Credits Start Before Arrival at Federal Prison?
Could RDAP Matter in a Fraud Case?
Yes, if the person has a documented substance-use disorder and is otherwise eligible. RDAP, the Residential Drug Abuse Program, can reduce a federal sentence by up to one year for eligible prisoners who successfully complete the program.
But RDAP is not automatic. The BOP usually looks closely at whether substance-use history is documented in the PSR, medical records, treatment records, or other reliable evidence. If the PSR says there is no substance-use history, fixing that later can be difficult.
Can a white-collar defendant qualify for RDAP?
Yes, a white-collar defendant may qualify for RDAP if there is a documented substance-use disorder and no disqualifying issue prevents the early-release benefit. The conviction type alone does not decide RDAP eligibility. The PSR and medical documentation are often critical.
Read more: RDAP in Federal Prison: How It Works and How to Get In.
Restitution and Forfeiture Can Follow a Person Into Prison
Restitution and forfeiture are not just courtroom issues. They may affect a person’s prison experience, finances, family planning, supervised release, and release preparation.
The court may order restitution to compensate victims. Forfeiture is designed to take proceeds or property tied to the offense. In this case, the DOJ reported that Spitzer agreed to restitution including $1,000,000 to the true owner of the Brooklyn properties and at least $1,845,400 to the SBA, subject to applicable credits. DOJ also reported agreed forfeiture totaling $2,350,000.
Inside federal prison, restitution often connects to the BOP’s Inmate Financial Responsibility Program. If the BOP believes a person is not participating properly, consequences may affect commissary, privileges, work assignments, and release planning.
Families should review:
- The restitution amount;
- Whether restitution is joint and several;
- Any forfeiture money judgment;
- Assets already seized or credited;
- Payment schedules in the judgment;
- Financial Responsibility Program expectations;
- Supervised release financial conditions;
- Business or real estate assets still requiring management.
Can a Real Estate Investor Keep Managing Business From Prison?
This is a major issue in cases involving real estate investors, settlement companies, LLCs, rental properties, development projects, or business loans.
A sentenced federal prisoner generally may not direct or operate a business from federal prison. The BOP allows limited communication to protect property and funds owned before commitment, but that is different from managing employees, directing transactions, negotiating closings, approving payments, moving money, or running real estate operations from inside.
For a real estate investor, this planning should happen before sentencing or surrender. The person may need outside managers, counsel, accountants, property managers, powers of attorney, bank authority changes, tax planning, and clear communication boundaries.
Related resource: Can I Run My Business While in Federal Prison?
Designation: Camp, Low, or Something Else?
Where someone serves a federal fraud sentence matters. A defendant facing sentencing may qualify for a federal prison camp or low-security facility depending on sentence length, criminal history, detainers, public safety factors, medical needs, and BOP scoring.
The sentencing judge may recommend a facility or program, but the BOP makes the final designation decision. That is why pre-sentencing documentation and post-sentencing designation strategy can be important.
Designation can affect:
- Distance from family;
- Safety and security level;
- RDAP availability;
- FSA programming;
- Medical care;
- Work opportunities;
- Visitation;
- Release planning;
- Halfway house timing;
- Home confinement preparation.
Related resource: Federal Prison Camp vs. Low vs. Medium Security.
What Families Should Do Before Sentencing
Families often wait until after sentencing to ask for help. In many cases, that is too late to fix important details.
| Pre-Sentencing Step | Why It Matters |
|---|---|
| Review the PSR carefully | Errors about loss, role, substance use, medical needs, criminal history, business assets, and family support can affect both sentencing and BOP outcomes. |
| Document RDAP history | If substance-use treatment is relevant, the documentation should be addressed before sentencing whenever possible. |
| Evaluate FSA eligibility | Fraud defendants may be eligible for credits, but the exact conviction and BOP records matter. |
| Prepare designation requests | Facility recommendations, medical records, family location, and program needs should be organized before BOP designation. |
| Resolve business authority | Real estate, LLCs, rental properties, accounts, taxes, and closings should be handled by authorized outside professionals. |
| Plan restitution and forfeiture records | Payment history, seized assets, credits, and court-ordered obligations should be clear before prison. |
| Build a release plan | Housing, employment, family support, treatment, supervision compliance, and financial responsibility may affect reentry. |
Why COVID-19 Relief Fraud Cases Still Matter in 2026
COVID-19 relief fraud remains a major federal enforcement area. The DOJ release notes that the Criminal Division’s Fraud Section has prosecuted over 150 defendants in more than 95 criminal cases involving PPP fraud and seized over $75 million in cash proceeds, along with real estate and luxury items purchased with fraud proceeds.
Even though the pandemic emergency is over, federal investigations into EIDL, PPP, and related fraud continue. Many defendants are still pleading guilty, awaiting sentencing, or serving sentences in the BOP.
Summary: What does this case teach federal fraud defendants?
This case shows that mortgage fraud, COVID-19 EIDL fraud, and money laundering can create exposure to prison, restitution, forfeiture, supervised release, and long-term BOP consequences. The time before sentencing should be used to review the PSR, loss amount, RDAP, FSA credits, designation, restitution, forfeiture, business management, and release planning.
How Prison Law Firm May Be Able to Help
Prison Law Firm may be able to help defendants, families, and attorneys prepare for the federal prison side of a fraud sentence.
That may include review of:
- Presentence Investigation Report issues;
- Federal prison designation strategy;
- Camp eligibility;
- Security-level scoring;
- RDAP eligibility and documentation;
- First Step Act eligibility and credit strategy;
- Good conduct time and release-date math;
- Restitution and IFRP concerns;
- Business and real estate management risks;
- Halfway house and home confinement planning;
- Administrative remedies if BOP records are wrong;
- Supervised release preparation.
Facing Sentencing in a Mortgage Fraud, EIDL Fraud, or Money Laundering Case?
Do not wait until after sentencing to start federal prison planning. The PSR, designation packet, RDAP documentation, First Step Act strategy, restitution records, and release plan can all matter.
If you or a loved one is facing federal prison for mortgage fraud, COVID-19 relief fraud, wire fraud, bank fraud, or money laundering, Prison Law Firm may be able to help review the BOP issues before the sentence begins.
Source and Related Prison Law Firm Resources
- U.S. Department of Justice: Real Estate Investor Admits Mortgage Fraud, COVID-19 Relief Program Fraud Schemes
- BOP First Step Act Overview
- BOP First Step Act Disqualifying Offenses
- First Step Act Time Credit Calculator
- How to Calculate First Step Act Time Credits
- RDAP in Federal Prison: How It Works and How to Get In
- Federal Prison Camp vs. Low vs. Medium Security
- Can I Run My Business While in Federal Prison?
- Home Confinement Eligibility Date
- How to Get Home Confinement and Avoid the Halfway House
- BOP Administrative Remedy Process: BP-8 Through BP-11 Explained
Frequently Asked Questions
Who pleaded guilty in the mortgage fraud and COVID-19 relief fraud case?
Arthur Spitzer, 39, of Toms River, New Jersey, pleaded guilty to one count of bank and wire fraud conspiracy and one count of money laundering.
What was the mortgage fraud allegation?
Federal prosecutors said the defendants made it appear that Spitzer owned three Brooklyn properties and had agreed to sell them to another defendant, who obtained a $4.5 million mortgage loan based on false closing and escrow representations.
What was the EIDL fraud allegation?
Prosecutors said Spitzer fraudulently obtained approximately $1.8 million in Economic Injury Disaster Loans for businesses with little or no operations by submitting false information about employees, revenue, cost of goods sold, or lost rents.
What charges did Spitzer plead guilty to?
He pleaded guilty to bank and wire fraud conspiracy and money laundering.
What is the maximum sentence?
The bank and wire fraud conspiracy count carries a maximum of 30 years in prison. The money laundering count carries a maximum of 10 years in prison. Maximum penalties are not the same as the likely guideline sentence.
When is sentencing scheduled?
Sentencing is scheduled for December 21, 2026.
How much restitution was reported?
The DOJ reported that Spitzer agreed to pay full restitution, including $1,000,000 to the true owner of the Brooklyn properties and at least $1,845,400 to the SBA, subject to applicable credits for amounts already repaid.
How much forfeiture was reported?
The DOJ reported agreed forfeiture totaling $2,350,000, consisting of $2,250,000 for the bank and wire fraud conspiracy and $100,000 for laundering fraudulent EIDL loan proceeds.
Can a mortgage fraud or EIDL fraud defendant earn First Step Act credits?
Possibly. Fraud convictions are not automatically disqualified in every case. The exact statute of conviction, judgment, BOP eligibility determination, immigration status, detainers, risk level, and discipline history must be reviewed.
Can RDAP reduce a fraud sentence?
Possibly. RDAP may reduce a federal sentence by up to one year for eligible prisoners who have a documented substance-use disorder and successfully complete the program. The PSR and medical documentation are important.
Can a real estate investor manage properties from federal prison?
Generally, a sentenced federal prisoner may not direct or operate a business from prison. Real estate investors should create lawful outside management, accounting, tax, property management, and legal authority before surrender.
Can Prison Law Firm help before sentencing in a fraud case?
Yes. Prison Law Firm may be able to help defendants, families, and attorneys review PSR issues, RDAP eligibility, FSA credits, designation strategy, restitution, forfeiture, business management risk, halfway house, home confinement, and release planning before sentencing.
This article is for general informational purposes only and does not create an attorney-client relationship. Federal sentencing, restitution, forfeiture, RDAP, First Step Act credits, designation, release-date calculations, halfway house, home confinement, supervised release, and BOP policy issues depend on the individual facts, judgment, PSR, conviction statutes, BOP records, and current law.