Momoud Aref Abaji is Guilty of $21 Million "Builder Bailout" Fraud
A federal jury convicted a Huntington Beach man for leading a “builder bailout” real estate scheme that resulted in the fraudulent purchase of more than 100 condos around the country with mortgages that mostly went into default, resulting in foreclosures and millions of dollars in losses.
Momoud Aref Abaji, 34, was convicted Friday afternoon in U.S. District Court Judge Andrew Guilford's Santa Ana courtroom of conspiracy to commit bank fraud and wire fraud, five counts of wire fraud and two counts of tax evasion. The jury found Abaji not guilty of one wire-fraud count.
Judge Guilford could sentence Abaji to up to 190 years in federal prison on May 23.
“Abaji’s fraud cost these financial institutions millions of dollars and put taxpayer funds at risk,” said U.S. Attorney Eileen M. Decker in a statement. “The Department of Justice is dedicated to protecting the public from this type of fraud.”
Five of Abaji’s co-conspirators have already been convicted, and one, Wajieh Tbakhi, remains a fugitive.
Those convicted operated the scheme through Excel Investments and related companies in Santa Ana and then Irvine. They identified condominium developments in which the developers were struggling to sell units and then arranged to purchase the units in return for large commissions. The developers profited by making it appear that their condos were selling and maintaining their value, while the schemers drew hefty commissions that were concealed from the mortgage lenders. A number of straw buyers were recruited to purchase the properties as “investors,” and the scammers ensured that they qualified for financing by filing false loan applications on their behalf.
The scheme involved condominiums in California, Florida and Arizona. The defendants bought units for themselves, their relatives and the straw buyers who had been offered an investment opportunity that required no down payment and would generate income through rental payments.
False information the scammers created about the straw buyers included fake employment, income, assets, W2 forms, pay stubs and bank statements, and the huge commissions were concealed from mortgage lenders through false and misleading purchase and sale agreements and fake HUD-1 settlement statements. Based on these false statements, mortgage lenders funded more than $21 million in loans.
Many of these loans went into default, and mortgage lenders lost millions after foreclosing on the properties. (Current losses were estimated at approximately $9 million.) The Federal Home Loan Mortgage Corp. (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) purchased dozens of these loans on the secondary mortgage market and suffered losses of at least $2.37 million as a result of delinquencies, defaults and foreclosures on the properties.
“Whether you call it a marketing fee, commission, or kickback, all forms of income are taxable,” stated IRS Criminal Investigation’s Special Agent in Charge Erick Martinez in a statement Friday. “As today’s verdict shows, the law is clear on the issue of taxable income and who is required to file and pay taxes.”
The FBI, Federal Housing Finance Agency’s Office of Inspector General and IRS Criminal Investigation conducted the probe that netted the schemers.
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