Like they said, it's fake mortage loans.
-the Sopranos give a frontman (Dr. Fried, the urologist) their money to buy 4 houses. Since the houses are in the ghetto they get them very cheap, 125k a piece.
-they use an appraiser to lie and artificially inflate the price of the house, to 300k a piece..
-now they want to apply for a mortgage loan from the bank and use that money to supposedly "buy" their own houses from their front man(the profit being the difference between the inflated price, 300k, and the price they originally bought the houses, 125k), but of course the money from the bank goes in their pockets
-obviously they don't want to be in hock once the bank realizes what's happened, so they use HUD. HUD(the government) ostensibly wants to help poor people buy houses at a reasonable price, so they look favorably on developers who want to build houses for poor families at a price they can afford. So HUD guarantees the mortgage application to the bank, if the project fails, HUD takes to loss, the bank gets paid anyway.
-of course HUD is not going to vouch for just anyone, so that's where "reputable" people like State Assemblyman Zellman and Maurice come in. They are respected community leaders with a history of Civil Rights activism going back to the 60s. They can be trusted, right?
-so the Sopranos get Maurice, who runs a non-profit, to go to HUD and ask their help in securing a mortgage loan. He is going to buy dilapidated houses, fix them up, and sell them cheaply to poor people. He can buy a few of them from this respected urologist, Dr. Fried, for just 300k a piece! Zellman strongly supports this application. Given the history and pedigree of these two noble men, HUD agrees to vouch for Maurice's loan.
-Maurice goes to the bank and applies for a mortgage loan. Since HUD guarantees and the bank gets paid either way, the bank doesn't have any incentive to look too closely into things. They give Maurice his loan of 1.2 million for the 4 houses.
-the profit on this whole deal is 700k, so Maurice and Zellman get 10% each and the Sopranos get 560k, more than 100%ROI.
-after a while they default on the loan to the bank. Since the loan was guaranteed by HUD, the bank goes to HUD for its money. HUD asks Maurice what happened, and he claims that since the houses were in the ghetto, gangs repeatedly vandalized the houses, stole the materials, delayed construction several times, and made it impossible for him to do his noble work. All that money was wasted in paying for stolen materials and the contractors. Oh well.
-the Sopranos get paid, the bank gets paid, Maurice and Zellman get paid, the taxpayer foots the bill.
- they didn't chase the squatters out of the houses for the scam, they chased them out because Tony wanted to strip all the metal piping from the houses and sell it for an additional profit.
