November 26, 10

NEWS / Manassas Woman Indicted for Alleged Mortgage Elimination Scheme

ALEXANDRIA, VA—A federal grand jury today indicted Linda Sadr, 51, of Manassas, Va., for her alleged involvement in a “mortgage elimination” scheme that caused more than $10 million in losses.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement today.

“In today’s housing market, mortgage elimination schemes become very enticing,” said U.S. Attorney MacBride. “Homeowners must be wary of anyone promising to quickly eliminate a mortgage for a fee or predicting guaranteed, unrealistic returns on investments. The indictment alleges that Linda Sadr defrauded more than 150 homeowners of $10 million. We encourage the public to tell law enforcement of similar allegations of fraud.”

“The FBI investigates fraudulent schemes designed to exploit lenders and swindle hard earned money away from homeowners,” said FBI Assistant Director in Charge McJunkin. “In these tough economic times, homeowners must remember that when something sounds too good to be true, it usually is.”

According to the federal indictment, from 2004 through 2008, Sadr is accused of marketing a scheme known as a “Mortgage Elimination Program.” Sadr allegedly falsely represented to potential homeowner clients that lenders were acting illegally with regard to refinanced mortgages and that she could obtain a discharge of newly refinanced loans because of the lenders’ illegal actions. Sadr allegedly proposed that she, acting through her businesses, would represent homeowner clients and challenge the lenders for their purportedly illegal actions, and any monetary settlements obtained from successful challenges against the lenders would be applied against the balances due on the refinanced mortgages, thereby eliminating the mortgages.

In general, those homeowner clients with sufficient equity in their homes who participated in the Mortgage Elimination Program were allegedly required to refinance their mortgages with maximum cash-out refinance loans. Subsequent to settlement, individual homeowner clients were required to pay 10 to 15 percent of the proceeds of the cash-out refinance loan as a fee to Sadr or to one of the entities she controlled. Clients were also required to give Sadr the equivalent of 12 to 18 months of advance mortgage payments to be held in “escrow,” an amount that Sadr allegedly claimed she would use to pay the refinanced mortgages for the homeowner clients until their mortgages were eliminated.

In addition to participation in the Mortgage Elimination Program, Sadr is accused of offering some clients the option of investing equity from their refinance or other monies in exchange for a guaranteed rate of return of 12 to 18 percent. Sadr allegedly guaranteed that the principal on those investments would be refunded at the end of the investment period.

The indictment alleges that Sadr recruited her mortgage elimination services to new clients via word of mouth through satisfied past homeowner clients, who thought their mortgages had been eliminated through monetary settlements received from Mortgage Elimination Program challenges. In reality, the refinanced mortgages were eliminated because Sadr allegedly repaid the refinance lenders in full. In so doing, Sadr allegedly used the “escrowed” mortgage repayment monies she obtained from other unsuspecting homeowner clients without their knowledge or consent.

According to the indictment, none of the more than 150 participants in the program received reconveyances on their homes and none received refunds from Sadr for the fees that were paid to her or the principal on the investments they made through Sadr and her entities. To date, the known homeowner client victim loss from Sadr’s alleged mortgage elimination ponzi scheme and related high-yield investment scheme exceeds $10 million.

The charges in the indictment include mail fraud and wire fraud, both of which carry a maximum penalty of 20 years in prison, and money laundering, which carries a maximum penalty of 10 years in prison.

This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorney Marla B. Tusk is prosecuting the case on behalf of the United States.

The public is reminded that an indictment only contains charges and is not evidence of guilt. A defendant is presumed innocent unless and until proven guilty.

http://washingtondc.fbi.gov/dojpressrel/pressrel10/wfo112310a.htm