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In April 2007, Anderson and Kramer began a check-kiting conspiracy in which they would trade checks of up to $75,000 from accounts that had less than $10,000 in real funds. One of the accounts had only $20.17 in it at the time a $75,000 check was written. However, by circling checks among numerous different accounts, Anderson and Kramer were able to falsely inflate the balances of the accounts, thus allowing checks from Kramer to third parties to clear. In May 2007, a West Bank security officer noticed the check activity and closed Anderson’s account.

Following the closing of Anderson’s bank account, Kramer began to take funds from the trust account of the closing company he owned, Iowa Closing & Escrow, to use for business expenses of his mortgage brokerage, Kramer Mortgage Co. The funds in the trust account belonged to lenders and homeowners and should have been used to pay off mortgages in connection with real estate transactions. However, on numerous occasions from 2007 to 2009, Kramer transferred money to his brokerage from the trust account, sometimes in amounts of more than $250,000 in a single month.

At first, Kramer repaid the amounts he took out of the trust account relatively quickly. Over time, however, the repayments became less frequent and thus a large deficit developed in the trust account. This put unwitting homeowners who used Kramer’s closing company at risk of having old mortgages on their properties not paid off. Kramer tried to fill the deficit in the trust account with mortgage payoff money he was supposed to give to U.S. Bank in connection with a line of credit. Those actions created a new set of problems, however, as the mortgage payoffs related to homes on which U.S. Bank held liens. By putting money into the trust account instead of paying off U.S. Bank, Kramer put the families who owned those homes at risk of foreclosure from U.S. Bank.

Kramer’s scheme culminated in September 2009 when Mohamed Rheem used Kramer’s closing company for the closing of his purchase of a home in West Des Moines. Rheem and his family lived in Baghdad, Iraq, until 2008 but left the country because of violence and threats from insurgents who were angry that Rheem had assisted the United States Army. The family arrived in Iowa in March 2008 as refugees, and Rheem quickly found employment with a dry cleaning company. Over the next year-and-a-half, he saved enough money to make a down payment on the purchase of the home—the first and only house he has ever purchased in the United States.

Kramer’s closing company was used to close Rheem’s purchase of the house. Due to the shortfall in the trust account, however, Kramer used the proceeds of Rheem’s new mortgage loan to pay off other mortgages that should have been paid off earlier in connection with other closings. The old mortgage on Rheem’s home was ultimately never paid off, resulting in Rheem spending approximately two years in foreclosure proceedings.

Kramer paid himself large sums of money from his brokerage throughout the year 2009, including a $50,000 payment to himself the day before the Rheem closing. In total, Kramer misapplied millions of dollars in mortgage payoffs over the course of the scheme and his actions resulted in at least five families not having clean title to their homes.

Kramer and Anderson will be sentenced in March 2013. Each count of wire fraud, conspiracy to commit wire fraud, bank fraud, and conspiracy to commit bank fraud is punishable by a term of imprisonment of up to 30 years and a fine of up to $1 million. In addition, Kramer and Anderson will have to make restitution to the victims of their crimes.  (usattysdia111412)

MORAL

Even a president can be a crook. It is a shame that the Iowa Association of Mortgage Brokers will suffer for his crimes because he was a past president.

VIRGINIA LOAN OFFICER GETS FOUR YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

On Nov. 16, Pervaiz Arshad was sentenced to 48 months in prison, followed by three years of supervised release, for his role in fraudulent mortgage loan transactions involving nine homes in northern Virginia and nearly $1.7 million in losses to lenders and for his role in attempting to obtain a fraudulent passport for a co-conspirator fleeing to Canada. Arshad was also ordered to pay restitution to the victim lenders and to forfeit the proceeds of his crimes.

Arshad was a loan officer for Annandale-based Estar Lending and recruited an individual to serve as a straw buyer in fraudulent real estate transactions designed to enrich himself and others. The properties, owned by co-conspirators, were sold to the straw buyer at a profit. Arshad ensured the straw buyer would qualify for the 100% financing used to buy the properties by reporting false employment and income information on the loan applications. Conspirators set up fake companies to verify the false employment information and further deceive the lenders. No payments were made on the loans, and Arshad intended for the straw buyer to flee to Canada before the fraud was discovered.

Arshad was indicted in this case in 2010 after he fled to Pakistan to avoid prosecution. He was arrested in July 2012 when authorities discovered him on a flight into Dulles International Airport. He is the sixth individual involved with Estar to be convicted.  (usattedva111612)

MORAL

As I have been repeatedly saying, the federal prosecutors are still at it and going strong and in this attorney’s opinion will continue to go strong until at least the end of 2013.

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE