Behrooz Badie, 53, Sacramento, California, has been found guilty of 13 counts of mail fraud following a six-day mortgage fraud trial.
According to the evidence presented at trial and as previously reported on Mortgage Fraud Blog, Badie, with co-defendants Derek Davis and Dino Rosetti (both of whom previously pleaded guilty), participated in a scheme to defraud mortgage lenders from June 2005 through December 2006. Badie was the buyer’s real estate agent for the purchase of 16 residential properties by four straw buyers. Rosetti served as the mortgage broker for 15 of the purchasers, and Davis orchestrated the scheme.
With Badie’s assistance, Harriette Davis, Derek Davis’s ex-wife, purchased six residential properties. Kristina Harvey, Davis’s girlfriend, purchased five. William Emmons, an elderly friend of Davis purchased four. Alan Bolton, a person to whom Davis owed money, purchased one.
Each of the purchase agreements drafted by Badie indicated the offer was being submitted by one of the foregoing buyers who intended to occupy the property as his or her primary residence. In fact, Badie knew the properties were really being purchased by Davis, who planned to remodel the properties and then sell them. The individuals named on the purchase agreements, at least two of whom Badie never even met, never planned on residing in the properties. Badie submitted the offers on behalf of the buyers so that 100 percent financing could be obtained for each purchase. In furtherance of that goal, Rosetti submitted loan applications that, in every case, substantially overstated the income, and understated the liabilities of each buyer.
The purported prices on the purchase agreements drafted by Badie also overstated the true price of each property. These prices included not only the amount to be paid to the respective seller of the property, but also a substantial cash-back payment that would be made from the seller to Calorneva Land Company at the close of escrow ranging from $42,094 to $137,980. These payments were agreed to in addenda Badie drafted, indicating the payments to Calorneva were for repairs or improvements to the properties. Although the purchase agreements were provided to the lenders and the appraiser with respect to each transaction, the addenda were not. Upon acceptance of the offers, Badie would ask the listing agent to increase the publicly available Multiple Listing Service price for a particular property to the inflated purchase price in the agreement he drafted. This was done to make it appear as if Badie was simply submitting full-price offers, not offers well over the actual asking price. Thus, neither the lenders nor the appraiser were aware of the cash-back payments to Calorneva, or that the true market value of the properties in every case was considerably lower than that offered by Badie. At the close of escrow, the difference between the inflated purchase price and the amounts the sellers were actually willing to accept for their properties was diverted to Calorneva. In all, Calorneva received more than $1.3 million in such payments. For his part, Badie received more than $260,000 in commissions.
Badie faces a maximum statutory penalty of 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case is the product of an investigation by the Internal Revenue Service ““ Criminal Investigation, the Federal Bureau of Investigation, and the California Department of Real Estate. Assistant United States Attorneys Philip Ferrari and Todd Leras are prosecuting the case.
United States Attorney Benjamin B. Wagner made the announcement.