Morris Olmer, 82, New Haven, Connecticut, was found guilty of one count of conspiracy to defraud the United States, eight counts of wire fraud and four counts of making false statements.
Rab Nawaz, 47, Waterford, Connecticut, was found guilty of one count of conspiracy to defraud the United States, eight counts of wire fraud, and one count of obstruction of justice.
Wendy Werner, 46, Sarasota, Florida, was found guilty of one count of conspiracy to commit mail fraud and wire fraud and one count of mail fraud.
Marshall Asmar, 40, Milford, Connecticut, was found guilty of one count of conspiracy to defraud the United States, three counts of wire fraud and three counts of making false statements.
A jury in Hartford, Connecticut, found the above four individuals guilty of multiple federal offenses related to their participation in an extensive mortgage fraud conspiracy that defrauded lenders of more than $3.2 million.
The jury could not reach a verdict on any counts against a fifth defendant, David Avigdor, 57, New Haven, Connecticut. A sixth defendant, Thomas Gallagher, 68, West Haven, Connecticut, pleaded guilty during the trial. Eight other individuals involved in the scheme pleaded guilty prior to the commencement of the trial.
According to court documents, statements made in court and the evidence disclosed during the trial, between approximately August 2006 and May 2010, Syed Babar, New London, Connecticut, led a mortgage fraud scheme during which participants obtained approximately $10 million in residential real estate loans, including loans insured by the FHA, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. As part of the scheme, Babar arranged for straw buyers to purchase houses they did not intend to occupy at fraudulently inflated prices and to apply for loans in the amount of the fraudulently inflated prices. The loans were supported by fraudulent appraisals and a variety of fraudulent information about the buyer, including information about his or her occupation, income, assets, liabilities, and intention to occupy the house as a primary residence. Babar and his co-conspirators also created a fictitious construction company called “Sheda Telle Construction, LLC” – which trial testimony revealed means “ring the bell and run” in Babar‘s native language – in order to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur. Babar and his co-conspirators then split the fraud proceeds generated from the scheme.
Thomas Gallagher, who operated Autumn Appraisals, LLC, in West Haven, created fraudulently inflated appraisals of residential real estate in exchange for payments, often in cash, of thousands of dollars per home. The payments were well beyond the basic appraisal fee of about $375 that was disclosed in appraisals and on federal mortgage documents.
Morris Olmer, a former attorney, conducted many of the closings for the fraudulent real estate transactions at his New Haven office, which resulted in hundreds of thousands of dollars in fraudulent proceeds being sent by wire and check to Sheda Telle Construction, LLC.
Wendy Werner and Marshall Asmar made hundreds of thousands of dollars selling properties at fraudulently inflated prices to straw purchasers. In August 2006, Werner, through her company, Marbo Restorations, LLC, sold three houses on Lake Street, Norwich, Connecticut, to a straw purchaser working with Babar. The fraudulently inflated sales prices for the three properties were $260,000, $270,000 and $270,000, respectively. Werner provided Babar with approximately $283,000 of the proceeds generated from the sale of the three houses, and Babar then wrote 10 checks totaling approximately $179,000 to the straw purchaser.
Asmar, working with Olmer, rented out houses that had purportedly been “sold” to straw buyers in FHA-insured loan transactions. The straw buyers never received the keys to the properties, never intended to live in the properties, and never made any mortgage payments.
Rab Nawaz also profited by acting as seller on several fraudulent property transactions. In addition, Nawaz had a phone number subscribed to his home address that was also identified with “Global Home Painting,” which was listed on certain loan applications as the fictitious employer of the straw buyer of a property. The number was used by co-conspirators to receive calls from lenders seeking to verify an applicant’s employment information.
During the trial, which began on March 16, the government called 20 witnesses, played numerous recorded conversations and presented hundreds of exhibits. On March 21, 2010, at the conclusion of the fourth day of trial, Thomas Gallagher pleaded guilty to one count of making a false statement to the government in connection with an FHA-insured loan.
On February 1, 2011, Babar pleaded guilty to multiple federal charges related to his leadership of this extensive mortgage fraud scheme. Seven other individuals have also previously pleaded guilty to various charges related to their involvement in this scheme. All await sentencing.
The charge of conspiracy to commit wire fraud carries a maximum term of imprisonment of five years. Wire fraud and mail fraud carry a maximum term of imprisonment of 20 years on each count. The charge of making a false statement carries a maximum term of imprisonment of five years on each count. And the charge of obstruction of justice carries a maximum term of imprisonment of 10 years.
David B. Fein, United States Attorney for the District of Connecticut, Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, and Michael P. Stephens, Acting Inspector General, U. S. Department of Housing and Urban Development, Office of Inspector General, today announced the jury’s verdict.
“This case demonstrates the commitment of the U.S. Attorney’s Office and our federal and state law enforcement partners to investigate and prosecute those individuals whose illegal activity contributed to our nation’s banking crisis,” stated U.S. Attorney Fein. “I want to thank the FBI, HUD-OIG and all the participants in the Connecticut Mortgage Fraud Task Force, who are investigating these crimes, protecting the public and helping to restore confidence in our housing and financial markets.”
This matter has been investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development – Office of Inspector General. The case is being prosecuted by Assistant United States Attorneys Eric J. Glover and Susan Wines and Special Assistant United States Attorney Liam Brennan.
In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force is focusing on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to email@example.com.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.
This case was brought in coordination with the President’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive and coordinated effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.