New London Man Charged with Operating Mortgage Fraud Scheme

David B. Fein, United States Attorney for the District of Connecticut, today announced that a federal grand jury sitting in New Haven has returned an indictment charging SYED A. BABAR, also known as “Ali,” 28, of Ledyard Street, New London, with one count of conspiracy to commit wire fraud and two counts of wire fraud. The charges stem from a mortgage fraud conspiracy that BABAR is alleged to have headed.

The indictment alleges that, between February 2007 and April 2010, BABAR, along with a mortgage broker, a real estate appraiser, two attorneys, and others, engaged in a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications and fraudulent property appraisals.

The indictment alleges that BABAR 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. The indictment further alleges that BABAR and others 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, it is alleged that 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.

According to statements made in court, it is alleged that BABAR and his co-conspirators conducted this scheme on more than 25 properties in New London, New Haven, and other locations in Connecticut. As a result, it is alleged that various lenders suffered a loss of at least $2.5 million.

The indictment was returned on April 27, 2010, and unsealed today. BABAR was arrested on May 12. Today, United States Magistrate Judge Donna F. Martinez in Hartford ordered BABAR detained while the case is pending.

The charges of conspiracy to commit wire fraud and wire fraud carry a maximum term of imprisonment of 20 years on each count.

U.S. Attorney Fein stressed that an indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial at which it is the government’s burden to prove guilt beyond a reasonable doubt.

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

This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Eric J. Glover.

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 e-mail 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.

Comments

Popular Posts