Tag Archives: identity theft

Mortgage Fraud Scammers Plead Guilty in US Foreclosure Capitol

Stockton, California, has been hit harder by the subprime mortgage crisis than any other US city. 

With a population of just over 280,000, Stockton had 22,000 foreclosure filings in 2007 (1 in 27 households), the highest foreclosure rate of any city in America. 

And as home prices continue to fall, the foreclosure crisis in Stockton is getting worse.

Stockton was an agricultural community, the seat of San Joaquin County, the fifth largest agricultural county in the United States and one of the most productive agricultural regions in the world.  In the past decade, however, Stockton experienced a population boom due to thousands of people settling in the area to escape the higher cost of living in San Francisco and Sacramento. 

Although the median income for a household in Stockton was only $35,453, the per capita income for the city was only $15,405, and 18.9% of families and 23.9% of the population were below the poverty line, subprime loans made houses in Stockton available to thousands who had very little income.

Home construction boomed, house prices soared, and subprime loans kept expanding the bubble further and further. House flippers, speculators and subprime lenders made millions.   

Then, in 2007, the bubble burst.

Few people were more active in profiting from the booming subprime housing market than a young immigrant from Pakistan named Iftikhar Ahmad. 

Between 2003 and 2005, Ahmad made millions of dollars buying and selling more than 100 homes and other properties in the Stockton area.  His company, I & R Investment Properties, LLC, was thriving.  Ahmad deposited at least $8.6 million from escrow closings and was able to send at least $484,000 back home to his native Pakistan.

Ahmad purchased a home at 327 N. Pilgrim Street in Stockton in 1997 for $22,000, then sold and repurchased the same property twice before ultimately selling it a third time in 2005 for $236,000. A house at 2228 E. Stadium Drive in Stockton was bought by Ahmad for $99,000; just 18 months later, he sold the house for $330,000.  In another series of transactions, a house bought and resold several times by Ahmad appreciated in value more than tenfold over an eight-year period.

It sounds like Iftikhar Ahmad was a very smart real estate investor.

The trouble was that Ahmad’s real estate empire was built on fraud.

On October 25, 2007, Ahmad was indicted on federal charges of mail fraud and money laundering, and on April 28, 2008, he pled guilty in federal court to mortgage fraud. 

Ahmad admitted that from July 2003 through October 2005, he participated in a scheme to defraud Long Beach Mortgage, a wholesale lender, in connection with the sale of 10 residential real properties. Between July 2003 and January 2005, Ahmad, through I & R Investment Properties, fraudulently sold 10 residential real properties, obtaining in excess of $1.5 million in loan proceeds.

In each of these transactions, the purchaser financed the property with money borrowed from Long Beach Mortgage.  The scheme involved the use of straw purchasers who lent their name and credit to real estate transactions in which they in fact had no interest. The scheme also involved false statements on loan documents, including those that related to income and occupation, and undisclosed payments by Ahmad of the down payment on behalf of the purchasers.

Many of the mortgages came from subprime lenders and in some cases the buyers used stolen identities. 

And in many of the real estate transactions, the buyers defaulted within a year.

In addition to Ahmad, three other defendants in the scheme have also pled guilty.

John Ngo, 27, of San Ramon, California, a former Senior Loan Coordinator for Long Beach Mortgage, pled guilty to perjury for falsely stating in testimony before the grand jury that he had not received money from a mortgage broker who referred borrowers to Long Beach Mortgage, including borrowers involved in transactions with Ahmad, when in fact he had received more than $100,000 from the mortgage broker.

Manpreet Singh, 24, of Stockton, California, entered a guilty plea to mail fraud for acting as a straw purchaser and borrower in connection with two properties that she purchased from I & R Investments in late 2004 and early 2005. She further admitted that Ahmad paid her in excess of $22,300 for her participation in the scheme.  The properties went into foreclosure within months of the purchase.

Jose Serrano, 44, of Stockton, California, pled guilty to a single count of mail fraud. As part of his plea, Serrano admitted that Ahmad had paid Serrano to recruit straw purchasers, and that Ahmad and Serrano caused several other purchasers to be paid for participating in the scheme.

The case against Iftikhar Ahmad and his co-conspirators was brought by US Attorney McGregor W. Scott, who also indicted mortgage fraud scammer Charles Head

Scott said: “This prosecution begins to bring into focus the ways that fraud occurred in the subprime lending market in the Stockton area in the 2003 to 2005 time frame. False representations were made in loan documents; down payments were secretly made by the seller on behalf of borrowers; buyers and recruiters were paid to participate in the scheme; and a loan coordinator working for a wholesale subprime lender was paid by a mortgage broker handling the transactions. The investigation continues.”

Singh’s sentencing date is set for June 9, 2008.  Sentencing for Ahmad, Ngo, and Serrano is set for July 14, 2008.

 

 

Mortgage Fraud Reports Up 50% in 2007

The latest report from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) covering the period from March 2006 to March 2007 shows a 50 percent increase in suspicious activity reports (SARs) indicating possible mortgage fraud.

The previous study had examined a statistical sample of SARs reporting mortgage fraud filed between April 1996 and March 2006.

FinCEN’s analysis of the most recently studied time period indicates a 50 percent increase in the number of SARs intercepting suspected fraud prior to funding a mortgage.

FinCEN also noted a 44 percent increase in SARs reporting mortgage fraud in 2006.

Analysis of the more recent data indicates that many identified trends continued and certain suspicious activities showed marked increases.

For example, reports of identity theft in conjunction with mortgage fraud SARs increased 96 percent from the previous study. In 2006, there were 37,313 mortgage fraud SARs filed. The final total for mortgage fraud SARs filed in 2007 was 52,868, an increase of 42 percent.

Mortgage loan fraud was the third most prevalent type of suspicious activity reported, after Bank Secrecy Act/structuring/money laundering and check fraud.

According to FinCEN, this tremendous increase in SARs relating to possible mortgage fraud does not necessarily mean that mortgage fraud has increased, but rather “indicates growing vigilance and awareness in the financial community.”

“FinCEN’s analysis indicates that the financial community is becoming increasingly adept at spotting and reporting suspicious activities that may indicate mortgage fraud,” said FinCEN Director James H. Freis, Jr. “This exemplifies how compliance with Bank Secrecy Act regulations is consistent with a financial institution’s commercial concerns.”

The purpose of the Suspicious Activity Report (SAR) is to report known or suspected violations of law or suspicious activity observed by financial institutions subject to the regulations of the Bank Secrecy Act (BSA).

FinCEN requires a SAR report to be filed by a financial institution when the financial institution suspects insider abuse by an employee, violations of law aggregating over $5,000 or more where a subject can be identified, violations of law aggregating over $25,000 or more regardless of a potential subject, transactions aggregating $5,000 or more that involve potential money laundering or violations of the Bank Secrecy Act, computer intrusion, or when a financial institution knows that a customer is operating as an unlicensed money services business.

There has been a tremendous increase in the number of SARs in the wake of the 9/11 terrorist attacks, and banks have been extremely diligent in filing such reports.

Incidentally, it was through the use of SARs that former New York Governor Eliot Spitzer’s liasons with prostitutes were exposed. Spitzer was snared when the FBI intitiated a money laundering investigation based on SARs that his bank filed due to Spitzer’s suspicious financial transactions.

Mortgage Fraud Conspirators Get Their Day in Court — And You Can See a Preview on YouTube

Two conspirators in a Florida mortgage scam that prosecutors described as an “equity stripping” mortgage fraud scheme that included identity theft and resulted in more than $6 million in fraudulent loans had their day in federal court in Tampa last week.

Federal prosecutors had claimed that the conspirators fraudulently submitted mortgage applications under false pretenses, obtaining and disbursing the proceeds of those loans to bank accounts in their control.

Last Thursday, mortgage broker Luis Uribe pleaded guilty to one count of wire fraud and one count of aggravated identity theft. He could face as much as 30 years in prison and a $1 million fine.

Uribe, 28, was a licensed mortgage broker involved in Bay General Contracting Services, a non-licensed contracting service firm. Federal prosecutors alleged that the company obtained dozens of fraudulent loans between July 2006 and September 2007, but never built anything. Bay General never hired any employees and brought in no one to work on the projects it had obtained loans for, prosecutors said.

Prosecutors also alleged that Bay General was used to improperly inflate the value of properties being bought, to strip actual and fraudulently created equity out of properties and to serve as a vehicle for “siphoning the proceeds” from fraudulently obtained loans.

On Friday, Andrea Batronie, 31, a licensed title agent from Land O’Lakes, Florida, was sentenced to 30 months in prison for her part in the scheme.

Batronie was found guilty last October of conspiracy to commit mail, bank and wire fraud.

Uribe is said to have obtained mortgage loans under false pretenses through a shell contracting company using stolen identities, apparently on the premise of additional construction work to be done. At closing, Batronie would divert the funds into bank accounts under their control.

This may not be Andrea Batronie’s first time in court.

On June 9, 2001, the TV program “Judge Hatchett” featured a Michael Cericola verses a Scott and Andrea Batronie of Florida. Cericola claimed that Scott and Andrea Batronie had sold him a scuba tank on ebay that was unusable.

Cericola won.

You can view part of the episode on YouTube here.

UPDATE:

Unfortunately — although it’s not a surprise — the YouTube video has been “removed by the user.” 

We’re guessing that Scott and Andrea Batronie didn’t find it very funny anymore, after Andrea had to go before a real court and got a real sentence.

 If you can find another copy of it online, please let us know.

UPDATE:

U. S. District Judge Steven Merryday in Tampa sentenced Luis Uribe to 8.5 years in prison for his role in the  “equity stripping” mortgage fraud scheme that included identity theft.  

This sentence is in addition to a 34 month sentence that Uribe received for a $3.8 million mortgage fraud scheme in Chicago.

The Tampa Tribune reports that Uribe cooperated with investigators after his arrest, giving them information about the schemes and his co-defendants.  The newspaper also reports that “Before he was sentenced, Uribe apologized to the victims and to his family.  ‘I’ve been incarcerated nine months,’ he said. ‘I’m not the same person as when I came in.’ He said his wife divorced him as a result of this. ‘I ask the court to consider I have a responsibility as a father. … I can only ask the court to be as lenient as possible.’

“He said he hopes to enroll in spiritual and educational programs in prison.  ‘I want to live a good life that’s free of shame and crime,’ he said.”

“Merryday paraphrased his interpretation of the defendant’s plea for lenience: ‘Judge, don’t let the blood in your veins run as cold as mine was the day I committed this offense.’ The judge added, ‘I guess I would ask the same favor if I was in your shoes’.”