Saturday, February 16, 2008

Mortgage Fraud Going Strong in Dearborn

The Dearborn area’s latest mortgage-fraud case ended in a guilty plea for Kalil Khalil, who was convicted in federal court 2 weeks ago for a fraud scheme that raked in $21 million. (“Tax accountant sentenced in $21-million mortgage fraud case”).

According to Stephen Murphy, U.S. attorney for the Eastern District of Michigan, Khalil’s “scheme began in January 2001 with fraudulent loan applications and documents.

“Murphy said the fraud occurred in several ways, including: loans received were not used to purchased or refinance a home; fake borrowers were named on the applications; the fraudulent borrower’s employment was false as were documents confirming employment; and appraisals were forged or inflated.”

Khalil’s partner in crime, Tariq Hamad, already was sentenced last September to nine years in prison for his part in the scheme. (“Dearborn man pleads guilty to mortgage fraud charges”).

After they fraudulently obtained money, Hamad and Khalil deposited it in various bank accounts, concealing their identitied by creating them in the names of straw title companies.

In a FrontPageNews article, (“Mortgage Fraud Funding Jihad?”), Patrick Poole details how these schemes often work:

The fraud usually begins when a seller is approached by a buyer with an offer too good to be true: the purchase of the home at a price well above list price (in some cases, hundreds of thousands of dollars). The catch is that the money over and above the list price is to be returned to the buyer by the seller at the time of closing. The incentive for the seller is that they receive their initial asking price, and in many mortgage fraud cases, the fraud ring tries to target homes that have been on the market for more than a year and where the seller will be eager to accept the buyer's unusual arrangements.

The next phase of the fraud almost always involves an insider at the mortgage company who will agree to a loan at the inflated value of the home (the list price plus whatever amount is to be returned to the buyer). In some instances, a phony construction company is established by the buyer on an associate to justify on paper the additional amount of the loan. Once the loan is approved, the deal goes to closing where the seller takes the equivalent of the list price and the buyer walks away with their share of the transaction. In a number of cases, no one ever occupies the home nor is a mortgage payment ever made.

The Columbus case demonstrates the flexibility and ease with which the fraudulent transactions are accomplished. According to an article in the Columbus Dispatch, one buyer, Mohamed A. Mohamed targeted homes in the inner city, where in one case a mortgage was obtained for $160,000 on a home that county officials had only appraised for $34,000. That mortgage was eventually foreclosed and Mohamed lost his mortgage brokers license, but he still maintains a real estate agent license and has been involved in other transactions in that capacity.

Conversely, a series of purchases made by Hany Rezk Ibrahim and his wife involve several of the highest priced residential real estate transactions made in the Columbus area in the past year, with the Ibrahims walking away with approximately $250,000 in each transaction. In one case, the pair bought a home for $1.3 million that had sold for $540,000 the year before. Just prior to going on his real estate purchasing spree, Hany Ibrahim incorporated a home improvement company, listing an address at a local condominium complex as the corporate address.

Poole also identifies at least three more recent incidences of mortgage fraud in Dearborn:
  • [In 2006] a Dearborn, MI man pled guilty to mortgage fraud in a plea deal with federal authorities to prevent being charged additionally with terrorist activities. At the time of his arrest, federal authorities found books, posters and recruitment videos for the Hezbollah terrorist organization inside the home of Nemr Ali Rahal. According to the Detroit News, a picture was also recovered of Rahal tearing up an American flag. Rahal had fraudulently obtained more than $500,000 by falsifying information on a mortgage application. Customs officials had also stopped Rahal and his son the previous year for having military-grade explosive residue on their passports as they reentered the US from Canada.
  • In another Dearborn-area case, two men, Mohammed Krayem and Mahmoud Youssef Kourani were accused in 2004 of transferring more than $200,000 obtained through real estate fraud and cigarette smuggling to Kourani's brother, Haider Kourani, the Hezbollah chief of military security for southern Lebanon. The money was to be used for purchasing military equipment from the United Nations Protection Force for use in attacks against Israel….
  • In June 2005, two Dearborn-area men, Ahmad and Musa Jebril, were convicted of mortgage fraud charges after defrauding six banks for $250,000 and dozens of people of up to $400,000. The Jebrils were active supporters of Hamas, and federal authorities said that Ahmad Jebril was training a cell of local men to wage jihad against the US. Both Musa and Ahmad Jebril had been thrown out of their local mosque, where Musa had been an imam, for their radical activities. A local Muslim writer has described in an article for Beliefnet the climate of fear that the two men created in the Islamic community by their jihadist preaching and activities. The indictment also noted that immediately following the November 1995 car bombing in Riyadh, Saudi Arabia, which killed four Americans, the Jebrils faxed a statement in support of the attacks to CNN. Subsequent to their conviction of mortgage fraud, the Jebrils and one of their associates were additionally charged by the federal government with trying to bribe a juror during their fraud trial.
Then last October we reported (“Leader of Dearborn Mortgage Scam Gets 10 Years”) on Safi Sobh, 34, of Dearborn, who was convicted by a federal jury of leading a mortgage fraud conspiracy, sentenced to ten years in prison, and ordered to pay $1,256,579 in restitution.Sobh’s conspiracy worked by obtaining “inflated appraisals on residential properties, created false applications and obtained millions of dollars in bank loans.”According to the U.S. Attorney’s Office, the trial evidenceEstablished that between July 2002 and December 2005, Sobh led a large conspiracy that successfully corrupted the system of checks and balances lending institutions rely upon to determine how much money they can safely lend on a property, and whether a particular borrower is qualified to repay the loan. Ohio Savings Bank, Commercial Federal Bank and several other federally insured financial institutions relied upon the false representations of the conspirators and loaned millions of dollars, most of which has not been recovered. Working out of his realty, The Success Group, Sobh hand-picked and taught his co-conspirators how to commit these crimes. Eight indicted co-conspirators pleaded guilty to acting as corrupt loan originators, processors, appraisers, and straw buyers.

As we said last October, "mortgage fraud is a big problem in Dearborn for several reasons, not least of which include the destruction of property values, the deterioration of neighborhoods, and further destabilizing an already badly depressed real-estate market.Dearborn’s mortgage-scammers are also a problem because fraud is one more source of funds that find there way to international terrorist organizations, especially, in Dearborn’s case, Hezbollah."
In this most recent case, court records stated that Tariq Hamad claimed he invested the money in the stock market, where he lost it.

We at DU possess no information at this stage permitting us to contradict this, or to state the pair were in reality diverting the funds to terrorism. But it wouldn’t be unreasonable to draw an inference from the patterns of recent history.


Anonymous said...

how can you be religious and go on and on about islam this and islam that but not blink for second in stealing someone else's money?

T.R. Clancy said...

I wasn't aware I was stealing anyone's money.