Muhammad Safadi, Los Gatos, California, Scott Safadi, 31, Saratoga, California, and Raquel Ramirez, 45, Fremont, California, have been indicted for bank fraud, conspiracy to commit bank fraud and making false statements to financial institutions.
According to the indictment, Muhammad Safadi constructed fourteen single family residences in the Rancho Amistoso LLC subdivision in Salinas, California. Safadi built Rancho Amistoso through his construction company, Focus Construction, Inc. Scott Safadi, Muhammad Safadi’s nephew, was a partner in Focus Construction and oversaw the sales and marketing of the Rancho Amistoso homes. Ramirez acted as the broker of record for the Rancho Amistoso properties on behalf of the prospective buyers. She was the owner of the realty company Mission Homes Realty, and was a licensed real estate and mortgage broker in the state of California.
The indictment further alleges that the three solicited primarily low-income home buyers to purchase single-family residences in the Rancho Amistoso subdivision that were priced in excess of $650,000. The conspirators knew that, for twelve of the Rancho Amistoso properties, the borrowers they solicited had insufficient incomes and assets to qualify for the mortgages needed to purchase the properties. The defendants falsified the loan documents submitted to the financial institutions to obtain the financing for the Rancho Amistoso properties. All of the buyers for these fraudulently obtained loans later defaulted on the repayment of the loans and the properties subsequently went into foreclosure proceedings.
On July 31, 2008, the first of the Rancho Amistoso properties in default status was sold through the foreclosure process. The 2006 sale price of the property was $725,000; the re-sale price of the property was $288,000. On Aug. 28, 2009, the twelfth of the Rancho Amistoso properties in default status was sold through the foreclosure process. The 2006 sale price of that property was $725,000; the re-sale price was $212,000.
According to the indictment, the Safadis and Ramirez caused a post-foreclosure loss amount to the financial institutions of approximately $5,560,050. The indictment also alleges that the Safadis obtained proceeds from the scheme to defraud in an amount of $4,570,928.87, and Ramirez obtained proceeds from the scheme to defraud in an amount of $230,029.75.
Muhammad Safadi and Scott Safadi were arrested this morning and made their initial appearances in federal court in San Jose, California. Bail was set in the amount of $250,000 for Muhammad Safadi, and $150,000 for Scott Safadi. Both men were placed on a home confinement with a curfew. The defendants’ next scheduled court appearance is at 9:30 a.m. on July 10, 2012, before Judge Paul S. Grewal for further bail proceedings. Ramirez is currently out of custody.
United States Attorney Melinda Haag announced. The three were indicted on June 13, 2012. The indictments were unsealed following the arrest of Muhammad Safadi and Scott Safadi.
The maximum statutory penalty for each count of bank fraud, and conspiracy to commit bank fraud, in violation of 18 U.S.C. Â§Â§ 1344 and 1349, is 30 years in prison and a fine of $1 million plus restitution. The maximum statutory penalty for each count of making a false statement to a financial institution, in violation of 18 U.S.C. Â§ 1014, is also 30 years in prison and a fine of $1 million plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. Â§ 3553.
Daniel Kaleba is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kamille Singh. The prosecution is the result of a multiple year investigation by the Internal Revenue Service, Criminal Investigation.
Please note, an indictment contains only allegations against an individual and, as with all defendants, the charged defendants must be presumed innocent unless and until proven guilty.