LAWSKY PROBES ERBEY

Ocwen scam cited

Billionaire William Erbey lied to investors and set up a complex web of companies to hide at least $65 million in funds to enrich himself, according to a letter from New York regulator Benjamin Lawsky.

Erbey personally approved a questionable arrangement between two companies in his control — Ocwen Financial and Altisource Porfolio Solutions — to provide mandatory insurance at higherthanmarket rates, according to a letter sent to Ocwen’s general counsel and signed by Lawsky, the superintendent of the New York Department of Financial Services.

Ocwen, which has been in Lawsky’s crosshairs since at least 2012, makes its money by buying mortgages from the homeowners least likely to make their payments, and usually forces them into foreclosure, according to the company’s own earnings documents.

“The extra expense of higher premiums, in turn, can push already struggling families over the foreclosure cliff,” Lawsky said in the letter.

Lawsky is taking a look at multiple other transactions to determine a pattern of corruption among Erbey’s companies, one source familiar with the investigation told The Post.

Erbey, whose net worth is reportedly north of $2 billion, stood to gain about twice as much by funneling the insurance premiums to Altisource rather than Ocwen, the DFS alleges.

That’s because he owns a 27 percent stake in Altisource, as opposed to 13 percent stake of Ocwen, the most recent publicly filed documents show.

Lawsky’s office says he owns 29 percent of Altisource and 15 percent of Ocwen.

Ocwen didn’t deny any of the charges in Lawsky’s letter.

“Ocwen will continue to cooperate with the NY DFS and provide the information requested, as we have done with all previous requests from the Department,” David Millar, a spokesman for Ocwen, said.

Here’s how Erbey allegedly set up the $65 million deal, according to the DFS:

Last August, Ocwen appointed a company called Beltline Road Insurance to find a new provider of mandatory insurance, a kind of insurance usually put in place by lenders when homeowners can’t pay for home insurance on their own.

Earlier that year, Ocwen sold Beltline, along with at least four other companies, to Altisource for $219 million, according to a February announcement from Ocwen.

Beltline then recommended another unaffiliated company, called Southwest Business Corp., to handle the insurance, and Altisource, one of Erbey’s companies, said that it should handle the commissions and other fees, which were above market rates.

That would mean that Erbey would secretly be getting paid while trying to make it look like there was an independent insurance provider.

This January, Erbey approved the deal over email without meeting with Ocwen’s board of directors.

The billionaire was so invested in keeping this relationship under wraps that he allegedly lied in regulatory filings about the company’s conflicts of interest, Lawsky said.

Southwest reviewed the letter and remains “confident that our relationship to the subject transaction is appropriate,” a spokeswoman said in a statement.

Ocwen fell 2.5 percent to $26.98 1n trading Monday on news of the report.