March 29, 09

NEWS / SIX ARRESTED IN $47 MILLION MORTGAGE FRAUD SCHEME

Mortgage Brokers and Escrow Company Allegedly Defrauded Banks and Financial Institutions

Six people were arrested today following a grand jury indictment for a mortgage fraud scheme that allegedly defrauded more than a dozen banks and mortgage lenders of more than $47 million. The investigation is ongoing and the amount of the fraud will likely increase. The defendants are charged in a 40 count indictment with conspiracy to commit bank, wire and mail fraud, eleven counts of bank fraud, seven counts of mail fraud, eleven counts of wire fraud, four counts of making false statements on loan applications, and seven counts of monetary transactions using criminally derived proceeds. The defendants were involved with three Bellevue, Washington companies: Emerald City Escrow LLC, Nationwide Home Lending LLC, and Kobay Financial Corporation. Four of these defendants will make their initial appearances in U.S. District Court in Seattle at 2:30 this afternoon:

* VIKTOR KOBZAR, 32, of Federal Way, mortgage broker
* CAMIE BYRON, 28, of Renton, loan officer for Kobay and Nationwide
* ALLA SOBOL, 28, of Renton, mortgage broker
* DAVID SOBOL,40, of Issaquah, real estate agent

These two defendants were arrested in Los Angeles and will be scheduled for arraignment at a later date:

* VLADISLAV BAYDOVSKIY, 31, of Bellevue, Washington, mortgage broker
* DONATA BAYDOVSKIY, 28, of Bellevue, part owner Emerald City Escrow

One additional defendant, SANDRA THORPE, 55, of Shoreline, an accountant who falsified income statements and employment verification letters will be arraigned April 9, 2009.

According to a search warrant affidavit made public today, investigators have reviewed 78 loan files that were submitted by Nationwide and Kobay to lending institutions. In 69 of these loan files, the investigation alleges fraudulent information was submitted to obtain some $47 million in loans. All of the loans were closed at Emerald City Escrow. Those charged allegedly used “straw buyers” and other unqualified buyers to obtain increasing loan amounts in repeated sales of the same property. Employees and principals at Kobay and Nationwide prepared and submitted falsified loan applications and related verification documents to lenders in a scheme to conceal the fact that buyers were otherwise unqualified to obtain purchase money loans. Relying on the falsified statement, lenders extended loans that exceeded the value of the property and the borrower’s ability to re-pay the loan. Employees and principals of Emerald City disbursed the excess loan proceeds from the escrow accounts to themselves, or others associated with them.

One property in Medina, Washington was sold to a recruited buyer for $775,000 and within six months was sold again to a second recruited buyer for $1.2 million. The falsified loan application submitted by KOBAY on behalf of the second buyer reported a monthly income of $45,000 a month with assets of more than $800,000. In fact the buyer was a house cleaner making between $18,000 and $20,000 a year. The loan was closed at Emerald City Escrow. Bank records indicate hundreds of thousands of dollars in proceeds from the transaction were used to benefit VIKTOR KOBZAR and VLADISLAV BAYDOVSKIY. Some of the funds allegedly went to pay VLADISLAV BAYDOVSKIY’s mortgage and moorage fees for his yacht.

A second property in Newcastle, Washington was purchased by DAVID SOBOL in August 2007, for $669,950. A month later SOBOL “flipped” the property, selling it to CAMIE BYRON for $1,000,000 – about $330,000 more than his purchase price. Using falsified loan applications that misrepresented her income and assets, BYRON obtained two loans on the property totaling about $900,000. BYRON then “flipped” the property again to another straw buyer in November 2007. The purchase price in November 2007 was $1.4 million. The loan application submitted by the buyer in November 2007 grossly inflated the buyer’s income to meet the lending requirements. According to the application, the buyer earned more than $324,000 in 2005 and $385,000 in 2006. In fact, the buyer reported income to the IRS of $13,245 in 2005 and $16,600 in 2006.

In a third transaction, a recruited buyer, whose income information was substantially inflated, was used to purchase a Medina home for just under a million dollars. The conspirators then used the buyer’s name and credit to obtain a construction loan of $1.95 million, pocketing the proceeds and leaving the buyer with the full loan obligation. The proceeds of the construction loan were not used to construct a new house. The buyer was forced to default on the loan.

“Mortgage Fraud is at the heart of many of the financial problems we face today. These arrests attest to the fact that we will vigorously pursue persons engaged in such scurrilous and harmful activity,” said Robert Bethel, Inspector in Charge of the Seattle Division of the U.S. Postal Inspection Service.

As part of the indictment, the government is seeking the forfeiture of a number of luxury vehicles and bank accounts. The vehicles include a 2004 Lamborghini, Gallardo, registered in the name of VIKTOR V. KOBZAR, and a second 2004 Lamborghini, Gallardo, registered in the name of VLADISLAV A. BAYDOVSKIY, a 2006 BMW 750 and a 2007 BMW X5 both registered to BAYDOVSKIY, and a 31 foot Bayliner registered to BAYDOVSKIY. The government is also seeking the forfeiture of a 2008 Range Rover and a 2007 Lexus registered to the SOBOLs.

“Individuals who try to fund a lavish lifestyle by devising fraudulent financial schemes can expect to have those assets seized by the government,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific-Northwest. “In light of that fact, it makes no sense for anyone to ever pursue ill-gotten gains.”

The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The charges are punishable by up to 30 years in prison.

The case is being investigated by the FBI, U.S. Postal Inspection Service, and the Internal Revenue Service Criminal Investigation (IRS-CI).

The case is being prosecuted by Assistant United States Attorneys Jim Oesterle and Carl Blackstone.

Tags: employment verification, criminal investigation, corporation, document,