Easy money – quick loans – anyone can qualify. It seemed that those words were the mantra for early in this decade. Now, it appears they are coming back to haunt us. With the sub-prime crisis and the economy in the tank, it is no surprise that law enforcement is uncovering, at a rapid rate, mortgage fraud.
John Andreas Tsiaoushis, 40, of Alexandria, Virginia, pled guilty to two-counts of mail fraud affecting a financial institution and giving false testimony at a hearing in the United States Bankruptcy Court.
Tsiaoushis faces a maximum penalty of 30 years in prison, 5 years supervised release, and a fine of approximately $7,600,000 when he is sentenced on July 18, 2008. As part of the guilty plea, Tsiaoushis agreed to the entry of a Restitution Order. The government estimates the amount of restitution due to be approximately $3,841,189.48.
Tsiaoushis admitted to operating a mortgage fraud scheme between approximately December 2004 and November 2007. According to court documents, Tsiaoushis fraudulently attempted to obtain an estimated $4,353,600 and successfully obtained an estimated $3,677,000 through the scheme. Court documents also indicate that, while the mortgage fraud was ongoing, Tsiaoushis engaged in a check kite scheme through which he obtained an estimated additional $163,500 by overdrawing his accounts with several Virginia banks.
To carry out the mortgage fraud, Tsiaoushis transferred or refinanced two Virginia residential properties, one located in Vienna, Virginia, and one located in Alexandria, Virginia, on six occasions. In applying for loans, he provided the would-be lenders with false documentation, such as false loan-payoff statements purporting to be from current mortgagees, and false Certificates and Affidavits of Satisfaction purporting to be from prior mortgagees. He then arranged for the loan proceeds to be misdirected to himself by causing the title companies closing the loans to send checks for the proceeds, which were ostensibly to be used to pay off pre-existing mortgages on the properties, to false addresses. In reality, the addresses were commercial mail drop boxes that had been opened by friends, associates, and family members. Tsiaoushis diverted much of the money to businesses in which he had ownership interests.
Tsiaoushis, who had filed for bankruptcy with the United States Bankruptcy Court for the Eastern District of Virginia in October 2005, also admitted to giving false testimony in a hearing before that court about selling one of the residential properties involved in the mortgage fraud scheme.
Khalil Salim Arbid, an associate and former driver for Tsiaoushis, was sentenced on April 4, 2008 by United States District Judge James C. Cacheris to 16 months in prison, 3 years supervised release, and ordered to pay $650,613.61 in restitution for his role in the scheme.
Every choice has a consequence is a comment I make in most presentations. As a white collar crime and mortgage fraud speaker, I speak from first hand experience about the truth about consequences. Reality is – no one escapes the consequences of their choices. While Tsiaoushis may have enjoyed the money for a time and avoided the consequences – they did not avoid the consequences all together. Prison is no fun and Tsiaoushis is facing several years plus substantial restitution for this conviction. Likely he will serve time and that will prove to be a dramatic change from his prior activities. You do reap what you sow.
White Collar Crime Speaker – Chuck Gallagher – signing off…