Undercover Chicago Operation Results in 24 Arrests for Mortgage Fraud

Operation Madhouse, a federal undercover investigation in which undercover law enforcement agents posed as straw buyers of houses seeking assistance in financing and closing fraudulent mortgage transactions, has resulted in charging 24 defendants for mortgage fraud in the Chicago area. In each of the cases, multiple real estate professionals worked to carry out the frauds. Each case involved a different fraudulent mortgage loan arranged by a different group of defendants based in the Chicago area. Those defendants' alleged roles in the fraudulent transactions included: fraudulently preparing loan applications and other documents; creating fraudulent banking information; fabricating income tax returns; creating fictitious verifications of employment and rental income; creating false appraisals; and submitting the bogus applications and supporting documents to the lenders. In each of the undercover transactions, a cooperating individual allegedly represented that he was selling a house to a nominee buyer who intended to walk away from the property and default on the mortgage after the transaction closed. In reality, the nominee buyers were undercover agents, as were paralegals that assisted in closing the real estate transactions. The houses bought with the fraudulently obtained mortgage loans were actually owned by the federal government. Instead of defaulting on the fraudulently obtained loans after the closings, the government fully repaid the lenders after each transaction closed. The loans involved in the undercover project totaled approximately $1.4 million. In a related case, which did not result from the undercover investigation, the defendants are alleged to have fraudulently obtained approximately $4.2 million in loans, causing losses in excess of approximately $1.1 million. The following individuals have been charged: Mohammed Ali Moallem, Bahidad Javid, Abe Karn, Donna Books, Hichem Julani, Daniel Lietz, Marwan Atieh, Ruwaida Dabbouseh, Khalil Qandil, Khaja Moinuddin, Mohammed Nasir, Louis L. Javell, Aysha M. Arroyo, Juan Gil, Michael Salem, Hakim A. Jaradat, Robert Goldberg, Oscar Paredes, Maryam Khan, Babajan Khoshabe, Sunil Kaushal, James Kotz, Siamak Safavi Fard and Noel Parmar.