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February 2, 11

NEWS / New London Man Admits Operating Extensive Mortgage Fraud Scheme


David B. Fein, United States Attorney for the District of Connecticut, announced that SYED A. BABAR, also known as “Ali” and “Asad,” 28, of New London, pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to multiple federal charges related to BABAR’s involvement in an extensive mortgage fraud scheme.

On July 28, 2010, BABAR was charged in a second superseding indictment with one count of conspiracy, eight counts of wire fraud, one count of mail fraud, and four counts of making false statements to the government. Today, BABAR pleaded guilty to each of the 14 counts.

According to court documents and statements made in court, the U.S. Department of Housing and Urban Development (“HUD”) provides mortgage loan insurance for qualifying residential real estate loans to individuals with low or moderate incomes. The insurance is provided through the Federal Housing Administration (“FHA”), a component of HUD, and the loans are financed through private financial institutions. Generally, the Program provides mortgage loan insurance for the purchase of one to four family properties. The Program provides mortgage insurance for the loan amount used to purchase real property.

HUD approves certain banks and mortgage companies as “direct endorsement lenders” to underwrite mortgage loans. Direct endorsement lenders submit such mortgage loans to HUD for FHA insurance. For each qualifying loan closed by direct endorsement lenders, HUD issues mortgage insurance certificates upon submission to HUD of a case binder containing, among other things, loan documents, closing materials and documents relating to the creditworthiness of the borrower.

Between February 2007 and April 2010, BABAR and others engaged in a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the FHA, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. BABAR was the de facto leader and organizer of the conspiracy.

In pleading guilty, BABAR admitted that he and others recruited and paid straw purchasers to nominally purchase homes. BABAR and his co-conspirators then directed the straw purchasers to enter into sales contracts with the sellers of homes for a price higher than the actual price that the seller would receive. Members of the conspiracy submitted false documentation in connection with loan applications that were submitted, including fraudulent appraisals of the properties being purchased in order to justify the inflated sales price and the loan amount being sought to fund each purchase. BABAR and others also created a fictitious construction company called “Sheda Telle Construction, LLC,” in order to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur. BABAR and his co-conspirators then split the fraud proceeds.

Contrary to the representations made on the loan applications, the straw purchasers never occupied the houses as their primary residences. They defaulted on the loans they obtained and let the houses go into foreclosure.

It is believed that BABAR and his co-conspirators conducted this scheme on at least 30 properties in Connecticut. As a result, various lenders suffered total losses of at least $3.2 million.

Judge Thompson has scheduled sentencing for June 27, 2011, at which time BABAR faces a maximum term of imprisonment of five years on the conspiracy count, a maximum term of imprisonment of 20 years on each count of wire fraud and mail fraud, and a maximum term of imprisonment of five years on each count of making false statements.

BABAR has been detained since his arrest on May 12, 2010.

U.S. Attorney Fein stated that the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development – Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover and Susan Wines.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to ctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

http://newhaven.fbi.gov/dojpressrel/pressrel11/nh020111.htm

Tags: corporation, document, criminal investigation,
 




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