Michael Jacoby, 44, Castle Rock, Colorado; Derek Zar, 30, Commerce City, Colorado; and Susanne Zar, 58, Frederick, Colorado, were found guilty on August 30, 2012, by a federal jury for wire fraud, bank fraud, and money laundering. The guilty verdicts were the result of a four-week trial before Visiting U.S. District Court Judge Kathryn H. Vratil. Jacoby was taken into custody immediately after the jury returned the guilty verdict. They are scheduled to be sentenced by Judge Vratil on December 10, 2012.
They were indicted by a federal grand jury in Denver on September 27, 2010, along with co-defendant Michael Macy. A superseding indictment was filed on Michael Jacoby, Derek Zar, and Susanne Zar on September 15, 2011. Michael Macy pled guilty to one count of wire fraud on June 16, 2011. The jury returned guilty verdicts against the defendants on all counts with which they were respectively charged. Michael Jacoby was found guilty of 11 counts of wire fraud, three counts of money laundering, and two counts of bank fraud. Derek Zar was found guilty of four counts of wire fraud and one count of money laundering. Suzanne Zar was found guilty of three counts of wire fraud and one count of money laundering.
According to the indictments and testimony at trial, between January 2005 and continuing through September 2006, in the state and district of Colorado, the defendants knowingly devised and intended to devise a scheme to defraud various financial institutions and other commercial lenders that funded residential mortgages and to obtain money, funds, and other property owned by and under the custody and control of those financial institutions and commercial lenders by means of materially false and fraudulent pretenses and representations. In furtherance of the scheme, one or more of the defendants participated in real estate transactions involving 18 properties located in Colorado.
It was part of the scheme that Derek Zar and a co-defendant bought homes at purported discounted rates because they paid cash. Jacoby often lent them the cash for these initial purchases and was then was paid back with interest. Furthermore, Jacoby acted as the real estate agent for the sales. Derek Zar and a co-defendant usually bought the homes through limited liability companies they owned and operated and then resold these homes within a very short time period to themselves as individuals at inflated prices financed by mortgage loans.
Additionally, Susanne Zar often refinanced the homes with mortgage loans based on an inflated value. Sometimes, the inflated value was supported by false documentation showing a higher initial purchase price than the actual initial purchase price. The defendants also prepared and submitted and caused to be prepared and submitted applications for loans which contained various materially false and fraudulent representations.
It was further part of the scheme for the co-defendants to cause to be submitted false appraisals for some of the properties. Jacoby usually recommended an appraiser to the mortgage broker for the loan approval. He supplied the appraiser with inflated values of comparable homes or omitted information concerning the home sales so the appraiser would overvalue the current home. At closing, through a grant program, the defendants funneled money back to the home buyer who was one of the defendants. They concealed from the lenders and other parties associated with the transactions that the home buyer was receiving a kickback for buying the home.
Wire fraud carries a penalty of not more than 20 years’ imprisonment and up to a $250,000 fine per count. Engaging in monetary transactions in property derived from wire fraud carries a penalty of not more than 10 years’ imprisonment and a fine of up to $250,000 per count. Bank fraud carries a penalty of not more than 30 years’ imprisonment and up to a $1,000,000 fine per count.
The U.S. Attorney’s Office, the Federal Bureau of Investigation, and IRS-Criminal Investigation announced the verdicts.
The case was investigated by special agents with the Federal Bureau of Investigation and IRS-Criminal Investigation.
The defendants were prosecuted by Assistant U.S. Attorneys Suneeta Hazra and Jamie Mendelson.
“Mortgage fraud was a core factor in the 2008 financial crisis that harmed so many Americans so deeply,” said U.S. Attorney John Walsh. “This verdict underscores the fact that those who commit mortgage fraud, no matter how complex, will face investigation, prosecution, and criminal consequences for their misconduct.”
“I would like to thank the United States Attorney’s Office and the Federal Bureau of Investigation for their work and effort in this successful investigation,” said Sean P. Sowards, Special Agent in Charge, Denver Field Office.
“The FBI is fully committed to protecting our economy by aggressively investigating those who commit mortgage fraud,” said FBI Denver Special Agent in Charge James Yacone.