Archives For Straw Buyer

Daniel Badu, 56, New City, New York, was convicted today of conspiring to commit mail and wire fraud affecting a financial institution.

Between 2008 and 2009, the defendant conspired with others to defraud The Funding Source (“TFS”), a mortgage bank, and other financial institutions by submitting fraudulent applications for home loans.  After being originated by TFS, the loans were sold to other financial institutions, including M&T Bank and JPMorgan Chase. http://www.mortgagefraudblog.com/?s=Daniel+Badu

The co-conspirators in this case submitted fraudulent applications for loans on eight properties in Bronx, New York. They fraudulently obtained mortgages that were insured by FHA on behalf of unqualified borrowers, such as the defendant. Badu was the purchaser on two of the properties and he aided in the submission of false documentation as part of the loan application, including documents purporting to show income from a fake job. The defendant also backstopped false employment for another loan, pretending that the borrower worked for his ophthalmology company, Eagle Eyes, which in reality was a shell company that performed no business.
The total loan amount for these eight transactions was $4,800,007.

In total, six defendants have pleaded guilty for their roles in this fraud. Attorney Laurence Savedoff, Esq. pleaded guilty to a misprision of a felony and was sentenced to four months in prison. Realtor and appraiser Julio Rodriguez pleaded guilty to mail and wire fraud affecting a financial institution, and a conspiracy to do the same, and was sentenced to six months in prison. Sentencing hearings are pending for mortgage broker Gregory Gibbons, and realtors Tina Brown and Alagi Samba.

Badu was sentenced to time served and 10 months home detention.

Attorney James P. Kennedy, Jr. made the announcement.

The sentencing is the culmination of an investigation by the United States Postal Inspection Service under the direction of Joseph W. Cronin, Inspector-in-Charge, Boston Division; the United States Department of Housing and Urban Development, Office of the Inspector General, under the direction of Special Agent-in-Charge Brad Geary; and the Federal Bureau of Investigation, under the direction of Special Agent-in-Charge Gary Loeffert.  Additionally, the New York State Department of Financial Services assisted with the investigation.

Jorge Flores, 48, Oakdale, New York; Joseph A. Gonzalez, 45, Henderson, Nevada; and Jose L. Piedrahita, 57, and Yorce Yotagri, 52, both of Freeport, New York, have been indicted for carrying out a scheme to use phony information and simultaneous loan applications at multiple banks to fraudulently obtain home equity lines of credit (HELOCs).

According to documents filed in the case and statements made in court:

From 2010 through 2018, Flores and Simon Curanaj, a real estate broker in the Bronx, New Yourk who has previously pleaded guilty and is awaiting sentencing, ran a mortgage fraud scheme in which they applied for more than $9 million in HELOCs from banks on residential properties in New Jersey and New York.

For instance, Gonzalez and Flores used a property in Jersey City, New Jersey, as part of the scheme. Gonzalez had been allowed to live at the property by the owner in exchange for management services, but neither he nor Flores owned the property. Gonzalez also recruited an individual with good credit to act as a straw buyer (Individual 1). Later, unbeknownst to the owner of the property, a “quitclaim” deed – a deed which contains no warranties of title – was prepared transferring the property to Individual 1. The signatures on the deed were forged.

Gonzalez and Flores then applied for two HELOCs from multiple banks using the Jersey City property as collateral in Individual 1’s name. They concealed the fact that the property offered as collateral was either already subject to senior liens that had not yet been recorded, or that the same property was offered as collateral for a line of credit from another lender. The applications also contained false information concerning Individual1’s income, which was stated to be higher than his actual income. At the time the applications were made, the value of the property was less than the amount of the HELOC loans for which Gonzalez and Flores applied.

The victim banks eventually issued loans to Individual 1 in excess of $500,000. After the victim banks funded the HELOCs and deposited money into Individual 1’s bank account, Individual 1 disbursed almost all of it to Gonzalez, Flores, and others. Gonzalez used $43,000 of the illicit proceeds to buy a luxury car. Individual 1 eventually defaulted on both HELOC loans.

In another example, Flores, Piedrahita, and Yotagri used a property in Freeport, New York, to carry out a similar scheme.

Each defendant is charged by indictment with one count of conspiracy to commit bank fraud. Flores and Gonzalez are also charged with two substantive counts of bank fraud. Yotagri was arraigned July 8, 2019, before U.S. District Judge John Michael Vazquez in Newark federal court. Flores and Piedrahita remain at large. Gonzalez will be arraigned at a date to be determined.

The conspiracy to commit bank fraud and substantive bank fraud counts carry a maximum potential penalty of 30 years in prison, a fine of $1 million or twice the gross pecuniary gain to the defendants or twice the gross pecuniary loss to others, whichever is greater.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited special agents of the U.S. Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge Robert Manchak; and special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation leading to the charges.

The government is represented by Assistant U.S. Attorney Jason S. Gould of the U.S. Attorney’s Criminal Division in Newark and Special Assistant U.S. Attorney Kevin DiGregory of the FHFA, Office of the Inspector General.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presume innocent unless and until proven guilty.

 

Steve Young Kang, a/k/a “Steven Young Kang and “Young Tae Kang,” 64, Ridgefield, New Jersey, and Young Jin Son, a/k/a “Joshua Son,” 49, Norwood, New Jersey, pleaded guilty today for their respective roles in a scheme to defraud financial institutions and others.

According to documents filed in these cases and statements made in court:

Kang, Son and others fraudulently induced mortgage lenders to participate in “short sale” transactions. In a typical short sale transactions, a financial institution agrees to allow a house owner in financial distress to sell his or her home for less than they owe on their mortgages. Such transactions are called short sales because the market value of the house is less than the amount owed by the house owner and the lender agrees to accept a payment “short” of the amount owed by the house owner.

Kang, a real estate broker and agent, admitted to a scheme in which, from June 2013 to January 2017, he sold his own properties and recruited others to sell properties in short sales to a co-schemer, Mehdi Kassai, who was able to obtain the properties for substantially less than the properties were actually worth through false documents, straw buyers, cosmetic damage to properties, and restricting the ability of others to bid on and buy those properties. Kassai then sold many of those properties to third-parties at a substantial profit. Kang defrauded financial institutions and others of $2.7 million in this manner.

Son, a real estate broker and agent, admitted recruiting others to sell properties in short sales to Kassai, who obtained the properties for substantially less than they were actually worth through false documents, straw buyers, cosmetic damage to properties, and restricting the ability of others to bid and buy those properties. Kassai sold many of those properties to third-parties at a substantial profit. Son defrauded financial institutions and others of $1.9 million in this manner.

The bank fraud and wire fraud charges each carry a maximum potential statutory penalties of 30 years in prison and a $1 million fine. Kang and Son have both agreed to forfeit the proceeds of the scheme. Sentencing for both defendants is scheduled for Oct. 1, 2019. Kassai previously pleaded guilty to his role in the scheme and is awaiting sentencing.

U.S. Attorney Craig Carpenito made the announcement.

U.S. Attorney Carpenito credited the Bergen County Prosecutor’s Office, under the direction of Prosecutor Mark Musella; special agents of the Federal Housing Finance Agency, Office of Inspector General, under the direction of Special Agent in Charge, Robert Manchak; and special agents of the U.S. Department of Homeland Security Investigations, under the direction of Special Agent in Charge Brian Michael, with the investigation leading to the guilty pleas.

The government is represented by Senior Trial Counsel Andrew Leven of the Healthcare & Government Fraud Unit of the U.S. Attorney’s Office, District of New Jersey, and Special Assistant U.S. Attorneys Charlie Divine and Kevin Di Gregory of the Federal Housing Finance Agency, Office of Inspector General.

 

Michael Todd Barrick, aka Kentuckyana Jones, 56, Smiths Grove, Kentucky, pleaded guilty to five counts of bank fraud on Monday.

According to Barrick’s plea agreement and other documents filed in the case, in 2007 Barrick and his co-defendant, Roger Hagan, agreed that Hagan would purchase property at 302 Laurel Street, Smiths Grove, Kentucky from Barrick for $575,000, but Barrick would make all loan payments and keep all rental income.  Hagan did not have sufficient assets and income to qualify for the loan, but at Barrick’s direction Hagan submitted a fraudulent financial statement to American Bank & Trust (AB&T) that substantially overstated Hagan’s assets and income.  Based on these fraudulent representations, AB&T approved Hagan for the loan.  Barrick paid Hagan’s $118,977.50 loan down payment, and gave Hagan $21,422.50 as payment for participating in the transaction.  The loan went into default in November 2010.

In 2008, Hagan entered a similar agreement with Barrick to purchase 708 Kelly Road, Bowling Green, Kentucky for $300,000.  At Barrick’s direction, Hagan again submitted a fraudulent financial statement to PBI Bank.  Based on these fraudulent representations, PBI approved Hagan for the loan.  After the loan closed Barrick paid Hagan $6,534 for participating in the transaction, and the loan went into default in March 2010.

In 2011, Barrick recruited co-defendant Lorri Hughes to purchase a Wholesale Mattress Warehouse (WMW) from Barrick for $179,000.  The WMW was purportedly located at 1700 N. Dixie Highway in Louisville, but in reality a McDonalds restaurant operated at that address, and had been there for many years.  At Barrick’s direction, Hughes submitted a fraudulent financial statement to Monticello Bank that substantially overstated her income and assets.  Based on these fraudulent representations, Monticello Bank approved the loan, and after the loan closed Barrick paid Hughes $20,000 for participating in the transaction.  The loan went into default in February 2012.

In 2010, Barrick recruited T.P. to purchase Som’ Beach Tanning (SBT), a business located at 140 River Place Avenue, Bowling Green, Kentucky from Barrick.  At Barrick’s direction, T.P. submitted a fraudulent financial statement to Monticello Bank that substantially overstated his assets.  The loan was supposed to be collateralized by SBT’s equipment, but Barrick had already used that equipment as collateral in a separate December 2009 loan from BB&T Bank, and that BB&T loan was not satisfied.  Based on these fraudulent representations, co-defendant Garry Hammer, a Monticello Bank loan officer, approved the loan, and after the loan closed Barrick paid T.P. $5,000 for participating in the transaction, but Barrick never surrendered control of the business.

In late 2010, Barrick recruited R.R. to purchase a Mattress City Wholesale (MCW) from Barrick for $179,880.  Under the terms of their agreement, R.R. would own the business on paper and would receive a small percentage of profits, but Barrick would pay the taxes, insurance, and all loan payments, and would receive the majority of profits.  The paperwork Barrick submitted reflected that the MCW was located at 2201 Gallatin Road, Madison, Tennessee.  In reality, a PetSmart was located at that address, and had been there for many years.  Based on these fraudulent representations, Monticello Bank, through co-defendant Garry Hammer, approved the loan.  After the loan closed, Barrick paid R.R. $30,000 for participating in the transaction, and used a significant portion of the remaining proceeds to pay off T.P.’s SBT loan.  The R.R. loan went into default in February 2012.

Barrick’s codefendants, Roger Hagan, Lorri Hughes, and Garry Hammer, all pleaded guilty in April.

Barrick is scheduled to be sentenced by United States District Court Judge Joseph McKinley in Bowling Green on August 15, 2019, at 9:30 a.m., and faces a statutory maximum penalty of 150 years in prison.  Barrick also stipulated to a loss of over $1.4 million. Roger Hagan, Lorri Hughes and Garry Hammer are all scheduled to be sentenced in Bowling Green on July 9, 2019.

The announcement was made by United States Attorney Russell M. Coleman.

This case is being prosecuted by Assistant United States Attorneys David Weiser and Josh Judd and was investigated by the Federal Deposit Insurance Corporation (FDIC) and the FBI.

Jaime Mayorga, 40, and Ruben Rodriguez, 42, both of Sacramento, California were found guilty, on Tuesday, after a six-day trial, on one count of conspiracy to commit wire fraud.

On July 14, 2011, Mayorga, Rodriguez, and five others were charged by indictment with conspiracy to commit wire fraud. The defendants, including Mayorga and Rodriguez, worked for Delta Homes & Lending, a Sacramento, California, based real estate and mortgage lending company that falsified home loan applications to obtain mortgage loans for borrowers, many of whom did not and could not qualify for a loan without the lies submitted by Delta employees. Mayorga and Rodriguez were real estate agents and loan officers. The now defunct Delta Homes was founded by co-defendant Moctezuma “Mo” Tovar, 49, Sacramento, California.

According to court documents, Delta opened one office in 2003 and eventually had multiple offices in Sacramento, with additional branch offices in Woodland, Yuba City, and Southern California. Rodriguez and Mayorga both started working at the original Delta office on Enterprise Drive in Sacramento. Later, they both moved to a branch on Franklin Boulevard, and Rodriguez went on to work at other Delta branches, including a large branch office located on Howe Avenue.

According to court documents and evidence presented at trial, Delta targeted the Latino community with advertisements in Spanish that heralded the company’s ability to obtain home loans for borrowers who otherwise would not qualify for a mortgage. In addition to advertisements in which Delta claimed to be “Hispanics Serving Hispanics,” Delta employees solicited clients at flea markets and by going door-to-door through the community.

In order to obtain mortgages, the defendants falsified information on loan applications regarding the clients’ income, occupation, and personal savings. Straw buyers were sometimes used when the true borrower did not have a sufficient credit score to qualify. The defendants also deposited money into borrowers’ bank accounts to meet the lenders’ requirement that the borrower have money on hand, taking the money back after acquiring the verification of deposited funds that the lenders also required.

The evidence at trial showed that the defendants’ fraud was also personally lucrative. During the investigation, Rodriguez estimated that in 2006 alone, he earned more than $400,000. Similarly, Mayorga told agents that although he earned a salary when he started at Delta, he shifted to commission-based compensation and then earned between 50 and 85 % of the brokerage fees. Mayorga stated that he earned more than $500,000 in 2005.

The aggregate sale price of the homes involved in the conspiracy was in excess of $10 million, and as a result of the conspiracy, mortgage lenders and others suffered losses of at least $4 million.

Co-defendants Tovar, Manuel Herrera, 39, Davis, California; Sandra Hermosillo, 57,  Woodland, California; and Jun Michael Dirain, 46, Antelope, California all pleaded guilty to one count of conspiracy to commit wire fraud. Christian Parada-Renteria, 43, Woodland, California pleaded guilty to two counts of concealing felonies related to the wire fraud conspiracy.

Rodriguez and Mayorga are scheduled to be sentenced on August 6, 2019 by U.S. District Judge John A. Mendez. The court has not yet set a sentencing date for Tovar, Herrera, Hermosillo, and Dirain. Parada-Renteria was sentenced to serve one year in prison.

Each of the defendants faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentences, 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.

U.S. Attorney McGregor W. Scott made the announcement.

U.S. Attorney Scott stated: “Mayorga and Rodriguez took advantage of members of the Latino community who hoped to become homeowners and manipulated the real estate process for personal gain. As so often occurs in these cases, the result was losses to the financial institutions and neighborhoods burdened with foreclosed properties. We are grateful for the diligence and professionalism of the FBI in investigating this case.”

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Brian A. Fogerty and Justin L. Lee are prosecuting the case.

Kirk Lawrence Brannan, 65, Lake Jackson, Texas pleaded guilty today for his role in a mortgage fraud scheme, admitting he conspired with others from 2005 to 2009 to execute a scheme to defraud Wells Fargo Bank and other lenders.

At the hearing, the court held that, in committing the crime, Brannan had used sophisticated means and had employed his special skills as an attorney and real estate agent. The court noted that Brannan had created false HUD-1 settlement forms and title documents that purported to show the sale of three of his properties to his children at grossly inflated prices. These HUD-1 forms then became the three comparable sales that appraisers relied upon in over-valuing the rest of Brannan’s beach home properties which Brannan then sold through the fraud scheme at inflated prices.

Brannan sold 10 beach homes in the Freeport/Surfside, Texas area to “straw buyers” at exorbitant prices. Other co-conspirators recruited straw buyers who created loan applications with misrepresentations that lenders relied upon in deciding to make the mortgage loans. The applications contained misrepresentations of the buyer’s address, employer, income and expenses. The applications also suggested the buyers were much better credit risks than they actually were. Brannan admitted he paid kickbacks to co-conspirators each time one of the beach homes was sold to a straw buyer.

The beach properties were sold at two to three times the appraised values. The mortgage lenders, including Wells Fargo Bank, were induced to lend the inflated amounts for the purchases through flawed or fraudulent appraisals which were based on comparisons Brannan manufactured to further the scheme.

Brannan created settlement statements that suggested he sold three of his properties to his children at exorbitant prices. Appraisers relied upon these “sales” as comparable sales in appraising Brannan’s remaining properties sold to straw buyers. As a result of the fraudulent appraisals, he and his co-conspirators were able to inflate the values for his properties and deceive the lenders into approving home loans at those exorbitant amounts.

All of the straw buyers defaulted on the mortgages, and all 10 of the beach properties ended up in foreclosure.

The fraudulent mortgage loan scheme resulted in a loss of $5,317,350 to Wells Fargo Bank and the other lenders. Brannan paid $2,401,368 to his co-conspirators as part of the scheme.

Previously released on bond, Brannan was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

Co-conspirators Chucoboie Lanier, 42, David Lee Morris, 56, and Derwin Jerome Blackshear, 52, all of Houston, Texas previously pleaded guilty for their roles in the scheme. Lanier received a sentenced of 36 months while Morris was ordered to serve a 42-month prison term. Blackshear is set for sentencing April 9, 2019.

Chief U.S. District Judge Lee Rosenthal handed Brannan a 36-month sentence to be immediately followed by three years of supervised release.

In imposing the sentence, Judge Rosenthal balanced Brannan’s honorable military service and other aspects of what, up to the time of the fraud, had been an exemplary life, with the tremendous damage mortgage fraud had done to the U.S. financial system and economy and the fact that Brannan had been a knowing and willing participant in such a scheme. She also pointed out that some individuals much less sophisticated than Brannan had suffered severe economic harm as a result of Brannan’s scheme.

Brannan was further ordered to pay $5,317,350 in restitution. A money judgement was previously entered in the amount of $2,401,368.

The announcement was made by U.S. Attorney Ryan K. Patrick.

The Texas Department of Public Safety and the FBI conducted the investigation. Assistant U.S. Attorneys Robert Johnson and Michael Day are prosecuting the case.

 

Patrick Lee, 46, formerly of Canton and Easton, Massachusetts,  a dual United States-Irish citizen was sentenced yesterday on charges arising out of a multi-year mortgage fraud scheme.

Between July 2005 and May 2007, Lee engaged with others in a mortgage fraud scheme. Specifically, Lee or a relative bought five multi-family buildings in Dorchester and South Boston, Massachusetts financed those purchases with fraudulently obtained mortgage loans, and quickly converted the buildings to condominiums which facilitated the resale of individual units in the buildings to straw buyers. The straw buyers were recruited for this purpose and their purchases were financed with fraudulently obtained mortgage loans. The straw buyers were assured that they would not have to put any money down or pay the mortgages, and that they would get a fee at closing and/or a share of the profits when the properties were sold. The loans were funded with interstate wire transfers from the mortgage lenders to the closing attorneys’ conveyancing accounts, and the proceeds were then distributed to Lee and/or a family member, the recruiters, and others involved in the scheme. According to the government, mortgage lenders suffered losses of about $3.9 million. Many of the lenders are no longer in business or no longer hold the fraudulent loans at issue. http://www.mortgagefraudblog.com/?s=Patrick+Lee

Lee was sentenced to four years in prison, three years of supervised release, and ordered to pay restitution of $842,552 to victim lenders. Lee will also be subject to asset forfeiture, in an amount to be determined later.

In November 2018, Lee pleaded guilty to wire fraud and making an unlawful monetary transaction. He was extradited from Ireland in 2017 to face the charges, marking the first extradition from Ireland to the United States since 2012.

United States Attorney Andrew E. Lelling; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; Stephen A. Marks, Special Agent in Charge of the U.S. Secret Service, Boston Field Office; and John Gibbons, U.S. Marshal for the District of Massachusetts, made the announcement today. Assistant U.S. Attorneys Sandra S. Bower and Christine Wichers of Lelling’s Criminal Division prosecuted the case.

David Plunkett, 53, Lynn, Massachusetts pleaded guilty today to assisting a multi-year mortgage fraud scheme by creating fraudulent tax returns and submitting fraudulent letters to lenders.

George Kritopoulos, 46, Salem, Massachusetts, one of the alleged leaders of the mortgage fraud scheme, was indicted in September 2018, and has pleaded not guilty. Co-conspirator, Joseph Bates III, 38, of Lynnfield, Massachusetts pleaded guilty in October 2018 to one count of conspiracy, three counts of wire fraud affecting a financial institution, and two counts of bank fraud.

According to the charging documents, from 2006 through 2015, Bates and others engaged in a scheme to defraud banks and other financial institutions by causing false information to be submitted to those institutions on behalf of borrowers, people recruited to purchase properties, located primarily in Salem, Massachusetts. The properties were usually multi-family buildings with two-to-four units, which the co-conspirators then converted into condominiums. The co-conspirators recruited other borrowers to purchase the individual condominium units, which were also financed by fraudulent mortgage loans.

The false information submitted to lenders included, among other things, representations concerning the borrowers’ employment, income, assets, and intent to occupy the property. Specifically, the false employment information included representations that borrowers were employed by entities that were, in fact, shell companies used to advance the fraudulent scheme. The employment information included false representations about the income that the borrowers received from the entities, when, in fact, the borrowers received little or no income from them.  Furthermore, the income asserted on the borrowers’ loan applications substantially overstated their true income. The false information also included representations that the recruited borrowers intended to live in the properties that they were purchasing, when the borrowers, in fact, did not intend to do so.

Plunkett assisted the scheme by preparing tax returns for some of the borrowers that contained false and inflated income. Some of those tax returns were submitted to lenders in support of the fraudulent loan applications. Plunkett also signed letters falsely representing that his CPA firm had prepared corporate tax returns for one of the shell entities, when in fact no such returns had ever been prepared or filed.

Because the borrowers did not have the financial ability to repay the loans, in many instances, they defaulted on their loan payments, resulting in foreclosures and millions of dollars of losses to the financial institutions. http://www.mortgagefraudblog.com/?s=David+Plunkett

Plunkett plead guilty to one count of bank fraud and one count of aiding in the submission of false tax returns.

The charge of bank fraud provides for a sentence of no greater than 30 years in prison, five years of supervised release, and a fine of $1 million, or twice the gross gain or loss, whichever is greater. The charge of aiding in filing a false tax return provides for a sentence of no greater than three years in prison, one year of supervised release, and a fine of $250,000, or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

U.S. District Court Judge Richard G. Stearns scheduled sentencing for June 25, 2019.

United States Attorney Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeastern Regional Office; and Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. Assistant U.S. Attorneys Mark J. Balthazard and Sara Miron Bloom of Lelling’s Securities and Financial Fraud Unit are prosecuting the case.

The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

Patrick Lee, 45, formerly of Canton and Easton, Massachusetts, a dual U.S.-Irish citizen,  pleaded guilty yesterday to charges arising out of a multi-year mortgage fraud scheme.

Between July 2005 and May 2007, Lee engaged with others in a mortgage fraud scheme. Specifically, Lee or a relative bought five multi-family buildings in Dorchester and South Boston, Massachusetts financed those purchases with fraudulently obtained mortgage loans, and quickly converted the buildings to condominiums which facilitated the resale of individual units in the buildings to straw buyers. The straw buyers were recruited for this purpose and their purchases were financed with fraudulently obtained mortgage loans. The straw buyers were assured that they would not have to put any money down or pay the mortgages, and that they would get a fee at closing and/or a share of the profits when the properties were sold. The loans were funded with interstate wire transfers from the mortgage lenders to the closing attorneys’ conveyancing accounts, and the proceeds were then distributed to Lee and/or a family member, the recruiters, and others involved in the scheme. According to the government, mortgage lenders suffered losses of more than $1.5 million.

Lee pleaded guilty to wire fraud and making an unlawful monetary transaction. Chief U.S. District Judge Patti B. Saris scheduled sentencing for Feb. 28, 2019. Lee was extradited from Ireland to the United States last year to face the charges. It was Ireland’s first extradition to the United States since 2012.

The charge of wire fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of unlawful monetary transactions provides for a sentence of no greater than 10 years in prison, three years of supervised release, and a fine of $250,000 or twice the amount of criminally derived property. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.

United States Attorney Andrew E. Lelling; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston; and Stephen A. Marks, Special Agent in Charge of the U.S. Secret Service, Boston Field Office, made the announcement today. Assistant U.S. Attorneys Sandra S. Bower and Christine Wichers of Lelling’s Criminal Division are prosecuting the case.

 

Surjit Singh, 72, Dublin, California, Rajeshwar Singh, 44, Pleasanton, California and Anita Sharma, 56, Gilroy, California were sentenced today for crimes relating to their involvement in a mortgage fraud scheme.

According to court documents, in 2006 and 2007, Surjit Singh recruited individuals with good credit to act as straw buyers for residential properties owned by his family members and associates. Rajeshwar Singh, a licensed real estate agent, assisted in the scheme by submitting loan applications for the straw buyers. Anita Sharma, a dental assistant at the time, was one of the straw buyers. Because Sharma and the other straw buyers could not afford the homes based on their true incomes, the Singhs submitted fraudulent loan applications and supporting material to lending institutions that included false statements about the straw buyers’ income, employment, liabilities, and intent to occupy the homes as their primary residences.

At least 14 properties were involved in the scheme. Anita Sharma alone purchased five homes in San Jose, San Ramon, Elk Grove, Sacramento, and Modesto, California. Other straw buyers purchased or refinanced properties in Stockton, Modesto, Patterson, Lathrop and Tracy, California. All of these homes were ultimately either foreclosed upon or sold in a short sale where the bank lets homeowners sell their homes for less than is owed on the mortgage.

Sharma was paid for her involvement in the scheme. Rajeshwar Singh received financial benefits through broker commissions for the transactions and as the seller of seven of the properties. He also continued to occupy the San Ramon property at a time when Anita Sharma should have been living there. Surjit Singh benefitted through payments out of escrow directed to shell companies, such as SJR Investments and BK Investments, which were associated with his daughter and significant other, whose initials are SJR and BK respectively. These payments were purportedly for contracting services, which did not occur. He also benefitted through rental payments made to him and his significant other by the renters of the homes, as the straw buyers were not living in the homes. In addition, many of his family members received money by selling properties and had money directed to them out of escrow. According to court documents and evidence produced at trial, the defendants were responsible for the origination of more than $9.3 million in fraudulently procured residential mortgage loans.

Surjit Singh was sentenced to 11 years and three months in prison, his son, Rajeshwar Singh was sentenced to 11 years and three months in prison on four counts of mail fraud, four counts of bank fraud, and four counts of false statements on loan and credit applications. Anita Sharma, was sentenced to three years and 10 months in prison on two counts of mail fraud, two counts of bank fraud, and two counts of false statements on loan and credit applications. Surjit Singh was ordered to pay a $2 million fine, $698,787 in restitution, and $847,000 in forfeiture. Raj Singh was ordered to pay a $1 million fine, $928,287 in restitution, and $838,399 in forfeiture. Anita Sharma was ordered to pay $603,180 in restitution and $30,000 in forfeiture.

Surjit Singh is in custody.  Rajeshwar Singh and Anita Sharma are scheduled to self‑surrender on January 9, 2019.

U.S. Attorney McGregor W. Scott made the announcement.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Lee S. Bickley, Kelli L. Taylor, and Kevin Khasigian prosecuted the case.