Virginia Man Sentenced to Seven Years for Mortgage Fraud

Vijay K. Taneja, a mortgage banker in the Washington, D.C. area, has been sentenced to 84 months in prison following his conviction for defrauding four companies. His jail term will be followed by three years of supervised release, and he has been ordered to pay $33 million in restitution to four financial institutions: Franklin Bank, First Tennessee Bank, Wells Fargo Bank, and EMC Mortgage Co. Taneja, who resides in Fairfax, Va., pleaded guilty to money laundering in connection with a mortgage fraud scheme involving his company, Financial Mortgage Inc., which originated and sold mortgages on residential properties in the greater Washington, D.C. area. According to court documents, FMI initially utilized his warehouse lenders to temporarily fund the mortgages and then sold the mortgages to another group of financial institutions as long-term investments. Beginning in 2001, FMI began defrauding these financial institutions, causing an accumulated loss of at least $33 million to four financial institutions by the time FMI filed for bankruptcy in June 2008. Taneja created fictitious loans with phony loan closings, selling the same legitimate loan to multiple investors and pocketing the proceeds generated from refinancing loans, when the bulk of those proceeds were intended to pay off prior mortgages on the same properties.