David B. Fein, United States Attorney for the District of Connecticut, announced that SYED A. BABAR, also known as “Ali” and “Asad,” 28, of New London, pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to multiple federal charges related to BABAR’s involvement in an extensive mortgage fraud scheme.

On July 28, 2010, BABAR was charged in a second superseding indictment with one count of conspiracy, eight counts of wire fraud, one count of mail fraud, and four counts of making false statements to the government. Today, BABAR pleaded guilty to each of the 14 counts.

According to court documents and statements made in court, the U.S. Department of Housing and Urban Development (“HUD”) provides mortgage loan insurance for qualifying residential real estate loans to individuals with low or moderate incomes. The insurance is provided through the Federal Housing Administration (“FHA”), a component of HUD, and the loans are financed through private financial institutions. Generally, the Program provides mortgage loan insurance for the purchase of one to four family properties. The Program provides mortgage insurance for the loan amount used to purchase real property.

HUD approves certain banks and mortgage companies as “direct endorsement lenders” to underwrite mortgage loans. Direct endorsement lenders submit such mortgage loans to HUD for FHA insurance. For each qualifying loan closed by direct endorsement lenders, HUD issues mortgage insurance certificates upon submission to HUD of a case binder containing, among other things, loan documents, closing materials and documents relating to the creditworthiness of the borrower.

Between February 2007 and April 2010, BABAR and others engaged in a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the FHA, through the use of sham sales contracts, false loan applications and fraudulent property appraisals. BABAR was the de facto leader and organizer of the conspiracy.

In pleading guilty, BABAR admitted that he and others recruited and paid straw purchasers to nominally purchase homes. BABAR and his co-conspirators then directed the straw purchasers to enter into sales contracts with the sellers of homes for a price higher than the actual price that the seller would receive. Members of the conspiracy submitted false documentation in connection with loan applications that were submitted, including fraudulent appraisals of the properties being purchased in order to justify the inflated sales price and the loan amount being sought to fund each purchase. BABAR and others also created a fictitious construction company called “Sheda Telle Construction, LLC,” in order to divert fraud proceeds to it and, in some cases, to falsely justify the artificially inflated sales price of houses based on renovations purportedly made to the property that, in fact, did not occur. BABAR and his co-conspirators then split the fraud proceeds.

Contrary to the representations made on the loan applications, the straw purchasers never occupied the houses as their primary residences. They defaulted on the loans they obtained and let the houses go into foreclosure.

It is believed that BABAR and his co-conspirators conducted this scheme on at least 30 properties in Connecticut. As a result, various lenders suffered total losses of at least $3.2 million.

Judge Thompson has scheduled sentencing for June 27, 2011, at which time BABAR faces a maximum term of imprisonment of five years on the conspiracy count, a maximum term of imprisonment of 20 years on each count of wire fraud and mail fraud, and a maximum term of imprisonment of five years on each count of making false statements.

BABAR has been detained since his arrest on May 12, 2010.

U.S. Attorney Fein stated that the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development – Office of Inspector General, and is being prosecuted by Assistant United States Attorneys Eric J. Glover and Susan Wines.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an email to ctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.

To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.

BIRMINGHAM—A 32-year-old Birmingham man pleaded guilty today in federal court to mail fraud charges connected to a mortgage fraud scheme that totaled more than $1 million, announced U.S. Attorney Joyce White Vance in conjunction with FBI and Housing and Urban Development officials.
AL CARSON ROCKETT, JR., was charged in a five-count information filed in U.S. District Court in Birmingham and pleaded guilty today before U.S. District Judge R. David Proctor to all charges. He agreed to forfeit $1,090,046 to the government as proceeds of illegal activity.
The four mail fraud counts involve parcels containing mortgage-application documents sent by a private postal carrier from Birmingham to mortgage companies in June, July and August 2005. The mortgage fraud ring operated between 2004 and 2006, according to court documents. Count Five of the information sought the forfeiture from Rockett.
According to Rockett’s plea agreement, he conducted the mortgage fraud as follows:
Rockett convinced people they could buy houses from him without any down payment or closing costs and without the need for documents to support a loan application. Buyers were told the houses were ready to be used as government-subsidized rental properties, that tenants were available to move in immediately and rent payments would exceed the mortgage payments. In many instances, however, there were no tenants, the buyers couldn’t make the mortgage payments, and the properties quickly fell into foreclosure.
On other loans, Rockett stated on loan documents that buyers were making down payments when, in fact, Rockett was making the payment.
Finally, none of the loan documents disclosed Rockett was paying each buyer between $3,000 and $10,000 as an inducement to buy his properties. The mortgage loan documents involved required that all cash payments between a buyer and seller associated with a real estate transaction be disclosed.
“This case is a clear example of the dangerous fraud that has permeated our real estate markets,” Vance said. “This prosecution should send a clear signal to anyone who has, or might consider falsifying any type of loan documents that it is our goal to investigate every case and bring the perpetrators to justice. This is not just a question of addressing losses to our financial community,” she said. “We have seen the value of our homes plummet and our communities put at risk by individuals who steal, lie and abuse the system. When a person lies on loan documents and then goes into foreclosure, we all suffer.”
HUD Inspector General Kenneth Donohue said Rockett’s case is an example of how his office, working with law enforcement agencies and U.S. Attorneys’ Offices across the country, will pursue individuals who are participating in mortgage fraud schemes, which are eating away at the economic heart of this country. “We will use whatever means necessary—both civil and criminal—to isolate and punish mortgage companies’ leadership and personnel who are corroding the soundness of HUD programs,” Donohue said.
“Mortgage fraud tears at our economy and threatens the American dream,” said FBI Special Agent in Charge Patrick Maley. “As the mortgage fraud problem continues to grow, the people of North Alabama can be assured that the FBI, along with our law enforcement partners, will be there to aggressively investigate and bring to justice those who would work to defraud financial institutions through lies and deceit,” he said.
The maximum sentence for each mail fraud count is 20 years in prison and a $1 million fine.
Special agents of the FBI and HUD’s Office of Inspector General investigated the case. Assistant U.S. Attorney Patrick Carney prosecuted it on behalf of the United States.

A Florida man convicted in Collin County of scamming thousands of dollars from McKinney homeowners is now facing a federal indictment.

John Barry, the owner and operated of the TKI Group and JAB Consulting in Winter Garden, Fla. is one of 32 defendants named in an indictment in the U.S. Eastern District of Texas court that includes 16 counts of mail and wire fraud and money laundering. 366th District Judge Greg Brewer handed down a 25-year sentence to Barry last year on a first-degree felony charge of money laundering for his role in a mortgage fraud scheme involving homes in the Stonebridge subdivision.

Barry is accused of using 10 homes on Hills Creek Drive sometime before December 2006 to dupe homeowners into paying more than the home’s actual worth. Investigators believe he would purchase the property near the actual market value and use fraudulent appraisals to sell the home at an inflated price.

He would obtain the fraudulent prices from home appraisers who investigators believe were also in on the scam. Elizabeth Tava Altizer and Pamela Sue Ford have each been indicted for their alleged role in Barry’s deals.

They each received a first-degree felony indictment of using false statements to obtain property/credit last May, according to Collin County court records.

Once Barry had an interested buyer willing to give them the money for the false price, he would take the money under the agreement he would use the proceeds to repair the property and perform upkeep on the home.

Federal investigators also believed at the time that Barry has committed similar home scams across the city and the state that involve at least 50 other homes, but could not confirm or deny the existence of any additional investigations.

The new indictment consists of the same scam but on a statewide scale. The indictment identifies 114 homes located in Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.

Barry again stands accused of defrauding lending institutions by convincing them to approve loans for mortgages for homes with inflated property values, according to the indictment.

If Barry and his fellow defendants are convicted of the federal charges, he could face up to two 20 year terms in a federal prison for the conspiracy and mail fraud charges and a possible additional 10 years for each money laundering charge.

U.S. Attorney John Bales said he hopes Barry’s case will prevent other mortgage and financial scams from increasing in scope.

“This indictment brings to light a criminal scheme that is quite breathtaking in its scope and beyond disturbing as far as the boldness of the fraud,” Bales said in a released statement. “The agents have done a remarkable job putting together this investigation and we look forward to presenting all of the evidence in court. Hopefully, others involved in mortgage fraud will be taking notice – we will be relentless in discovering, exposing and holding accountable those who have committed similar crimes.”