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.

Leader of Dearborn Mortgage Scam Gets 10 Years

Safi Sobh, 34, of Dearborn, convicted by a federal jury of leading a mortgage fraud conspiracy, has been sentenced to ten years in prison in by U.S. District Judge Patrick J. Duggan, 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 evidence

Established 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. Workiong 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.

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.

We see a regular pattern in the Dearborn-Detroit area of criminal conspiracies involving everything from cigarette smuggling to extortion to tax evasion to health-care fraud to mortgage fraud in which proceeds are intended for Hezbollah. Although some mortgage fraud might be motivated by nothing more than simple greed, we believe a large portion of mortgage fraud in this area (bearing in mind the large number of Arabic defendants) has its roots in Hezbollah’s bottomless need for funds.

One local blogger who posts at JihadChat, commenting this past May on the Sobh conspiracy , said “a title company officer told me Dearborn-Detroit [Wayne County] now has the HIGHEST REAL ESTATE MORTGAGE TITLE FRAUD IN AMERICA.”

She researched a recent report by the Mortgage Asset Research Institute [MARI], which she says “explains many Muslim Scams without ever saying ‘Muslim.’”:

What sort of games are Arab-Muslims (with big gas cash) playing with mortgage applications? You name it -- everything from little white lies about income or assets all the way up to what the FBI calls "air loans" that are based on completely fabricated information. The Umma never work alone. They can fabricate and falsify for each other.

The popularity of low- and no-documentation ("stated income") mortgages is also a key component of rising fraud levels, according to MARI. Sometimes referred to as "liar loans" or "NINAs" (no asset, no income verification), low-doc mortgages originally were designed for professionals and business owners with high credit scores who preferred not to lay out their confidential tax, income and investment information every time they applied for a mortgage. Typically those loans required FICO scores above 700, relatively low loan-to-value (LTV) ratios, and came with slightly higher fees or rates.

But recently, even consumers with subprime credit scores, low down payments and questionable incomes are opting for reduced documentation. Too many of these, however, turn out to be liar loans indeed, says MARI, where applicants falsify their incomes and asset information -- frequently with the help or a cooperative mortgage broker. Muslims, because of non-tax paying immigrant status, can fabricate interest in many assets or show assets owned by various family members as being owned by the applicant.

The MARI report cites this real-life example to illustrate the problem: "An officer at a Florida mortgage company applied to a second lender for two stated income loans. The applications were submitted 90 days apart. In the first application, the borrower stated his monthly income as $24,000, and in the second he said it was $30,000." When the mortgage officer was challenged about the discrepancy, he replied, "I thought that on stated income loans you could claim an income as high as necessary" to qualify for the loan amount the applicant needed. Muslims use al-Taquia in a way of being agreeable but confused when they know the actual requirements.

MARI
The most common misrepresentation and frauds in 2003-2004 related to falsehoods on applications (56 percent of all reported frauds), followed by fabricated tax returns and bank documents (33 percent -- up sharply from 23 percent three years earlier), false employment verifications (12 percent), and hoked-up appraisals (10 percent). because the Muslim sub-culture is primarily one of cash transactions funds are easily converted or diverted to bolster a financial position.

Remember this. Of over 10,000 FBI agents, only approximately 13 speak and read Arabic. How many of those are native Muslims and loyal only to umma?

There is a reciprocal relationship between Hezbollah's terrorist state-within-a-state in Southern Lebanon, and many (that's many, not all), of Dearborn's Lebanese residents: Dearborn sends Hezbollah money, and Hezbollah uses it to buy rockets to kill Jews, further Hezbollah's grip on all of Lebanon, and otherwise forward the agenda of Hassan Nasrallah (celebrated here in Dearborn as “Our Leader”), of whom so many Dearborn residents are fervent supporters.

We aren't Hezbollah's only source of money. But our contributions put us in the shady company of the likes of Iran and Syria. We'd like to see Dearborn's contributions stopped.