Fugitives Surrender to Authorities and Plead Guilty to Mortgage Fraud

Allison Tussey —  December 12, 2013 — Leave a comment

Zahid and Riffat Ali, who have been wanted by federal authorities on bank fraud charges since 1996, surrendered to agents of the FBI at San Francisco International Airport when their flight from Pakistan arrived. They pleaded guilty in federal court in San Jose, California, to bank fraud.

The Alis, husband and wife, were indicted by a federal grand jury in 1996 for bank fraud in violation of 18 U.S.C. § 1344. Before they could be arrested, they departed for their native Pakistan. Efforts to extradite them failed. Recently, in a deal worked out with prosecutors ahead of time, they agreed to voluntarily return.

According to the Indictment, the Alis defrauded Home Savings of America of $438,866 by submitting a loan application that contained false statements, and by submitting false back up documents in support of the application. They submitted the application in the name of a third party straw borrower to a relative, Mujeebullah Mujahid Khan, who was a loan officer at Home Savings. Khan pleaded guilty to bank fraud in 1997.

Alis pleaded guilty to bank fraud in front of The Honorable Lucy H. Koh, United States District Court Judge in San Jose. Both defendants were released after they each posted $50,000 bail.

In pleading guilty, both defendants admitted that during the summer of 1994 they owned a residence located at 1560 Bird Avenue in San Jose, California. Between approximately July 2, 1994, and September 9, 1994, they convinced a younger man who was living with them rent free to apply for a loan to purchase the 1560 Bird Avenue house from them. They admitted that they knew that his income and assets would not qualify him for a loan if the loan application had contained a truthful explanation of his circumstances. So they filled out a draft of the loan application that contained several falsehoods, including the following:

• They falsely claimed that Bhatt was earning $13,000 per month.

• They falsely claimed that he was employed by a company named Reffko, a company created by Ali.

• They also falsely claimed that Bhatt had $85,000 worth of stock.

Finally, in order to corroborate Bhatt’s alleged income, they deposited $60,000 to $80,000 of their own funds into his bank account, and falsely confirmed his employment and income when Home Savings called to verify his employment at Reffko.

The sentencing hearing is scheduled for March 26, 2014, before The Honorable Lucy H. Koh, United States District Court Judge, in San Jose. The maximum statutory penalty for bank fraud, in violation of 18 U.S.C. § 1344, is 30 years in prison, and a fine of $1 million, plus restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

United States Attorney Melinda Haag announced the guilty plea.

Gary G. Fry is the Assistant U.S. Attorney who is prosecuting this case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the by the Federal Bureau of Investigation.

Allison Tussey

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