Bijan Madjlessi, 58, Mill Valley, California, David Lonich, 59, Santa Rosa, California, Sean Cutting, 44, Sonoma, California, and Brian Melland, 45, Santa Rosa, were arrested on federal charges of conspiracy, bank fraud, wire fraud, money laundering, false statements to a bank, false bank entries, and attempted obstruction of justice.
According to the Indictment returned by a federal grand jury on March 19, 2014, Madjlessi is alleged to have defaulted on a loan of more than $30,000,000, which he had personally guaranteed, relating to a real estate project known as the Park Lane Villas East, Santa Rosa. Working with attorney Lonich, Cutting, then-CEO of Sonoma Valley Bank, and Melland, then-Senior Vice President of Sonoma Valley Bank, as well as a nominee borrower, Madjlessi allegedly obtained a loan from Sonoma Valley Bank to purchase his own defaulted loan on the premise that the nominee was the actual borrower when, in fact, he and Lonich were the true borrowers.
According to the Indictment, Cutting and Melland failed to disclose their knowledge of the true identities of the borrowers to Sonoma Valley Bank and took steps to authorize the loan. Madjlessi’s nominee successfully obtained the loan from Sonoma Valley Bank and purchased the defaulted loan from a Federal Deposit Insurance Corporation contractor. Madjelssi, Lonich, and the nominee later settled litigation regarding the foreclosed loan, and Madjlessi and Lonich obtained title to the Park Lane Villas East.
The Indictment also alleges that Cutting helped Madjlessi and Lonich gain control of additional units at the Park Lane Villas East by issuing letters on Sonoma Valley Bank letterhead falsely stating that potential nominee buyers had sufficient funds at Sonoma Valley Bank for purchase. Madjlessi and Lonich are also alleged to have instructed the nominee to make false claims to federal agents and to a federal grand jury investigating the transactions.
Ultimately, Madjlessi and Lonich obtained refinancing on the Park Lane Villas East through Freddie Mac, but not before Sonoma Valley Bank failed in August 2010. Until it failed, Sonoma Valley Bank was insured by the Federal Deposit Insurance Corporation (FDIC), was a member of the Federal Home Loan Bank of San Francisco, and had received $8.65 million in funds from the Troubled Asset Relief Program.
All four defendants were arrested in Marin and Sonoma Counties in California and made initial appearances in federal court in San Francisco. Each defendant was released on a $250,000 bond. Defendants’ next scheduled hearing will be before the Honorable Susan Illston, United States District Court Judge, on April 18, 2014 at 11:00 a.m.
, announced United States Attorney Melinda Haag, Scott O’Briant, Special Agent in Charge, Special Inspector General for the Troubled Asset Relief Program, Leslie DeMarco, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General, and Wade V. Walters, Special Agent in Charge, Federal Deposit Insurance Corporation, Office of Inspector General, announced the charges.