Like many of my readers, I lived through the Savings and Loan crisis several decades ago and it wasn’t pretty. My fear – with the magnitude of potential mortgage fraud rising to the surface, what we might see in the future could dwarf the problems that were created by the S&L crisis.
And another man pleads guilty! IFTIKHAR AHMAD, 36, of Stockton, Calif., pleaded guilty to two counts of mail fraud and one count of engaging in monetary transactions involving criminally derived property. The charges relate to a widespread mortgage fraud scheme centered in the Stockton, California area.
After an extensive investigation conducted by the Federal Bureau of Investigation and the Internal Revenue Service–Criminal Investigation (IRS-CI), Ahmad saw the light and knew that a guilty plea would be best for him considering the circumstances. investigation remains ongoing.
But how did this massive fraud get uncovered?
Rebecca Wood knew something was wrong when she got a call from Washington Mutual about a late house payment. Her response helped the FBI uncover millions of dollars in mortgage fraud.
According to property records, someone using Wood’s identity bought two houses in Stockton in 2003. When the loan for one of the homes went bad, Washington Mutual called Wood.
According to the US Attorney’s office, 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 (and in one instance resale) of 10 residential real properties primarily located in the Stockton, area. Between July 2003 and January 2005, AHMAD, through a company called I & R Investment Properties, LLC, fraudulently sold (and in one instance resold) 10 residential real properties, obtaining in excess of $1.5 million in loan proceeds. In each of the transactions, the purchaser financed the property with money borrowed from Long Beach Mortgage.
The scheme involved the use of some straw purchasers— purchasers who lent the 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.
The use of false documents is common among mortgage fraud convictions. However, based on my experience speaking about mortgage fraud to realty associations and mortgage groups, it is clear that many people somehow feel that simple “financial positioning” is acceptable. More times than not, on close examination – “financial positioning” can be construed as fraud.
In this case, AHMAD is the fourth defendant to plead guilty as a result of the investigation in the case. On December 17, 2007, JOHN NGO, 27, of San Ramon, California, a former Senior Loan Coordinator for Long Beach Mortgage, pleaded 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.
On March 31, 2008, MANPREET SINGH, 24, of Stockton, entered a guilty plea to a single count of mail fraud. She admitted as part of her plea that she had participated 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. Clearly here a case of fraud for money!
On April 17, 2008, JOSE SERRANO, 44, of Stockton pleaded 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 purchasers to be paid for participating in the scheme.
“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,” said United States Attorney Scott. “False representations were made in loan documents; down payments were secretly made “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,” said United States Attorney Scott.
“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.”
Every choice has a consequence! Considering the wide spread incidences of mortgage fraud, I suspect that this case is just the tip of the iceberg when it comes to what has been done and how many are yet to be discovered. As a mortgage fraud speaker, I am finding more and more that people are just now beginning to understand how wide spread mortgage fraud is and how easy it can be to be caught up in a mortgage fraud investigation.