Ex-Credit Union Exec Pleads Guilty to Mail Fraud in Loan Scheme

By Vijay Daundkar

Former assistant vice president of risk management for the Credit Union of Georgia has pleaded guilty in a fraudulent loan scheme five days before she was scheduled to go to trial in Atlanta. Ardonus “Donna” Perkins, 40 pleaded guilty to a mail fraud that resulted in more than $300,000 in losses according to the federal authorities. Acting U.S. attorney John Horn said that during the period of January 2008 and August 2010, Perkins opened signature loans and true lines of credit at the credit union, which are open-ended personal lines of credit, in the names of unsuspecting friends and family members.

John Horn further said that Perkins took the money from the loans for her personal use Credit Union of Georgiaand refinanced auto loans without the knowledge and approval of the vehicle owners and took the proceeds. She also received cash advances on VISA accounts set up fraudulently in the names of family members and friends without their knowledge.

“This now former credit union executive used her institutional knowledge of the financial system to concoct a multifaceted fraud scheme to steal money from the credit union,” Horn said while announcing the plea.

According to the indictment issued by a federal grand jury last year, Perkins convinced her co-workers into believing that she was indeed authorized by her friends and family members to get the loans approved, receive cash advances and for auto refinancing. The loan documents then were prepared by her staff and they also recommended approval of the loans. In some cases, loans were approved even though the credit scores of Perkins’s friends and family members were way below the credit union’s standards of approval.

The fraudulent scheme came to light only after Perkins was fired in 2010 for policy violations the authorities said. She had been continuously increasing the loan limits and available credit limits on the loans to obtain more funds, the authorities further said. She also tried to conceal the fraudulent scheme by using some of the money to pay down the loans, lines of credit, and credit card accounts she had set up in the names of other people. She is scheduled to be sentenced on July 30.

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Georgia Men Accused of Defrauding Integra Bank

By Vijay Daundkar

Two men are facing criminal charges that they defrauded Integra bank in 2007 and 2009, four years after the failure of the bank. The case that is ongoing was also mentioned in a report to Congress that was released Wednesday. The charges were filed in January in U.S. District Court in the Northern District of Georgia.

The Special Inspector General for the Troubled Asset Relief Program has produced the Integra Bankquarterly report that details how the TARP program is being managed and whether TARP funds are being properly used.

Ronald Onorato and Larry Milder are indicted in the criminal indictment of defrauding both Integra Bank and Columbus, Ohio-based Huntington National Bank. Both Onorato and Milder face two counts of bank fraud and one count of conspiracy to commit bank fraud.

The incident occurred when Onoroto was serving as chief executive officer of Northpoint Group according to the indictment. The development company is based in the Atlanta suburb of Alpharetta, Georgia. Milder was working as CEO of Northpoint Group.

Northpoint created Point Berkeley III which is a limited liability corporation under its umbrella. Point Berkeley III was created to build a seven-story commercial, retail and office building in Duluth, Georgia.

Integra received an application for $35.6 million construction loan for the Duluth project in the fall of 2007 according to the indictment. A second bank, Huntington National was brought in because of the size of the loan. The loan of $35.6 million was sanctioned in December 2007 out of which $20 million was funded by Huntington and $15.6 million by Integra.

The terms of the loan allowed Point Berkeley to draw on the loan after submitting invoices documenting project-related expenses.

Point Berkeley spent $378,615 on site work in December 2007 but fraudulently submitted invoices in the amount of $1.7 million to Integra. Onorato and Milder kept the overpayment of $1.3 million to themselves.

A 15th loan draw request was submitted by Point Berkley in July 2009. The request was for $456,374, out of which $438,144 was for work done by Ordner Construction. The indictment says that Onorato kept the entire amount of $456,374 to himself upon receiving it from Integra.

Integra being a TARP recipient, the Special Inspector General for TARP was interested in the case.  Integra failed in July 2011 without repaying the $83.6 million TARP funding it had received in February 2009. When Point Berkley defaulted on the loan, Integra had already received the TARP funding. Onorato and Milder’s defense attorneys were not available for comment.

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Burlingame Businessman Pleads Guilty to $1.96M Loan Fraud

By Ogozi John

A former grocery store owner in the Bay Area neighborhood has pleaded guilty to defrauding banks and the Small Business Administration of about $1.96 million.

Nimer Anton Massis, 40, of Burlingame, CA., pleaded guilty to the charges before a federal Good Loan Officercourt in San Francisco for making false statements in several loan applications to three banks and the SBA.

In 2007 alone, Massis applied for and obtained three sets of loans from Citibank totaling $700,000 using three different business names and he defaulted on each of the loans.

The following year,  Massis applied for a ’working capital’ of $250,000 through an SBA loan which was approved and issued by Mission National Bank. In the loan application, Massis was required to disclose “business indebtedness” and “all outstanding installment debts, contracts, notes and mortgages payable.” He failed to do so as he did not disclose the outstanding debt owed to Citibank, neither was it included in his personal financial statement.

Massis later defaulted on this loan, leading to losses for the SBA and Missions National Bank.

Massis obtained yet another loan under the SBA 504 loan program where $965,000 was disbursed to hum through One California Bank and Capital Access Group. In the loan application, which was under another business name, Massis failed to disclose his indebtedness to Citibank and three months after, he defaulted on this loan.

In all, Massis received about $1.96 million and was still owing about $1 million in debt before the fraud was uncovered by the FBI which led to the charges and his guilty plea.

Massis will be sentenced on July 23, and he faces an obligatory 30 years in prison and $1 million in fines.

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Loan Broker Pleads Guilty to $100 Million Fraud

By Ogozi John

The owner of a Virginia-based loan brokerage firm has pleaded guilty in Baltimore federal court to using forged documents to obtain $100 million in bank loans financed by The U.S. Small Business Administration.

According to prosecutors, Joon Park, 43, of Woodridge, VA., CEO of Jade Capital and SBAInvestments, LLC, entered a guilty plea to charges of conspiracy to commit bank fraud.

In a statement, U.S. Attorney Rod Rosenstein explained how Park used Jade Capital to submit phony documents to the SBA in order to obtain loans under the agency’s Section 7 (a) program that allows small business owners to qualify for loans after they invest a specified amount of their own money in the business.

“SBA underwriters approved $100 million in business loans brokered by Jade Capital based on fraudulent bank statements, checks, gift letters, resumes and tax returns that made it appear that borrowers had invested money in the businesses,” Rosenstein said in the statement.

Park admitted to the crime, revealing how he conspired with others, including his brother, Loren Park, to knowingly prepare SBA loan application documents which were submitted to loan originators and underwriters on behalf of clients who were unqualified for the loans based on their financial investments. Park and his conspirators went on to alter bank statements to show that the applicants had invested the required funds to qualify for the loans.

And in some cases, the loan applicants did not even know that their information was being altered, instead, Joon and Loren Park diverted the proceeds without the applicants’ knowledge.

Between 1998 and 2011, Park submitted over 124 fraudulent loan applications and obtained millions of dollars in loan proceeds guaranteed by the SBA using taxpayers’ money.

Sentencing in the case has been scheduled for May 28, and Park faces up to 30 years in prison with payments of more than $91 million in restitution.

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Former VP at TARP-Recipient Bank Convicted for Wire Fraud

By Ogozi John

A senior loan officer at a TARP-recipient bank has been convicted on five counts of wire fraud, according to an announcement by John W. Vaudreuil, United States Attorney for the Western District of Wisconsin and Christy Romero, Special Inspector Weimert General for TARP.

David Weimert , 64, of Madison, Wis., served as the senior vice president in Lending Administration Anchor BankCorpof Anchor BanCorp Wisconsin, Inc. (ABCW) and as the president of Investment Direction Inc. (IDI), a subsidiary of ABCW.

Weimert used his position to defraud the bank in order to obtain ownership stakes and receive commission in the sales of properties which the bank sold to raise funds to remedy financial trouble during the financial crisis.

Evidence in court also revealed how Weimert lied and misrepresented facts in order to gain an ownership interest and a 4% commission fee in the sales of Chandler Creek, a joint venture partnership to develop an industrial park in Round Bank, Texas.

In a testimony by his bank supervisors, Weimart reported that Burke Group, a California-based real estate developer, gave the condition they would only purchase IDI’s share of Chandler Creek if Weimart would also purchase a minority interest in Chandler Creek.

But Weimart did not tell the Board of Directors that he actually desired to own a minority interest for himself, and not as a demand by the Burke Group.

Based on this misleading information, IDI’s Board approved the Burke’s group offer, and Weimert received 4.785% interest in Chandler Creek and pocketed $311,680 as 4% commission fee from the sale.

In January 2009, ABCW, the parent company of Anchor Bank, received $110 million through the Troubled Asset Relief Program. In August 2013, Anchor Bank filed for bankruptcy and the federal government suffered a loss of $104 million on the investment and another $23 million that was owed to TARP.

Weimart now faces up to 20 years in prison on each count; sentencing has been scheduled for June 16 by U.S. District Judge James D. Peterson.

 

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Developer Arrested for Fraud and Bankruptcy Crimes

By Vijay Daundkar

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John S. Leonardo of the District of Arizona and Inspector in charge Gary Barksdale of the Criminal Investigation Group of the U.S. Postal Inspection Service announced the arrest of Alex Papakyriakou, an Arizona shopping center developer. He was charged with fraud and bankruptcy. He allegedly concealed his control of approximately $17 million in assets.

Alex Papakyriakou, aka Alex Papas, 57 of Phoenix, Arizona was indicted in the District of Shopping CenterArizona with eight counts of bank fraud, one count of conspiracy to commit bankruptcy related offenses, four counts of concealing assets in bankruptcy, one count of making a false oath in bankruptcy and three counts of falsification of records in bankruptcy.

Papas and a now deceased business partner organized over 200 limited liability companies from 1997 to 2008 to develop shopping centers and other real estate projects in Arizona and elsewhere according to the allegations in the indictment. The project was funded by approximately $150 million from investors and $250 million in bank loans. Papas is alleged to have created Cobea Associates, LLC (Cobea), which is nominally owned by his sister in South Africa in order to shield his valuable family assets from creditors and investors. Actually Papas was the one who operated and controlled it. He then allegedly transferred title of his assets to Cobea, including a luxurious home in Paradise Valley, Arizona, a vacation beach house and a condominium in Laguna Beach, California, and a business entity in Scottsdale, Arizona, which bought and sold expensive vintage collector automobiles.

Papas also allegedly mislead many banks regarding the transfer of the assets and his financial condition to both obtain new loans and extend existing loans secured by his assets. He also filed for bankruptcy in 2011. He claimed that he had less than $1 million in assets and over $144 million in liabilities, while allegedly concealing and denying his control of the millions of dollars in assets he transferred to Cobea.

Criminal Investigations Group of the U.S. Postal Inspection Service is investigating the case. Senior Litigation Counsel Jack Patrick and Trial Attorney Sarah Hall of the Criminal Division’s Fraud Sections are prosecuting the case where as Assistant U.S. Attorney Raymond Woo of the District of Arizona is assisting them.

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Former Officers of Bank Charged with Disclosure Fraud

By Vijay Daundkar

Four members of Wilmington Trust were charged with fraud by the Securities and Exchange Commission for intentionally understating loan dues during the financial crisis. M&T Bank acquired the former Delaware based bank holding company. It also paid $18.5 million in September 2014 to settle related SEC charges of improper accounting and disclosure fraud.

According to the complaint filed in federal district court in Wilmington, Delaware by the Wilmington TrustSEC, the four participated in a scheme to mask the impact of real estate market declines on the bank’s portfolio of commercial real estate loans. They violated the requirement to fully disclose the amount of loans that are 90 or more days past due by improperly excluding hundreds of millions of dollars of past due real estate loans from financial reports filed by Wilmington Trust in 2009 and 2010.

“Corporate officials bear important responsibility for ensuring that corporate filings provide the investing public with accurate information about the company’s financial condition.  We allege these defendants doctored a key financial metric to make it appear to investors that the bank was financially sound, when the reality was quite the contrary,” Andrew M. Calamari, Director of the SEC’s New York Regional Office said.

Former Chief Financial Officer of the bank, David R. Gibson, former Chief Operating Officer and President Robert V.A. Harra, former Controller Kevyn N. Rakowski, and former Chief Credit Officer William B. North are also named in the complaint. According to the complaint, approximately $351 million of matured loans that were 90 days or more past due were omitted by Gibson, Rakowski, and North.

The complaint also alleges that the Gibson, Rakowski and North conspired to substantially misreport past due loans that fall under this category in the first half of 2010. Gibson is also accused of substantially understating the amount of non-accruing loans in Wilmington Trust’s portfolio in the third quarter of 2009 and the bank’s loan loss provision and allowance for loan losses in the fourth quarter of 2009. Gibson, Harra, Rakowski and North are each charged with violating or aiding and abetting violations of the antifraud provisions of the federal securities laws. The SEC wants to have all four of them return the alleged ill-gotten gains with interest and civil monetary penalties. It is also seeking to have Gibson and Harra barred from serving as corporate officers and directors.

Meanwhile, criminal charges were also announced against  Rakowski and North by the U.S. Attorney’s Office for the District of Delaware. Margaret Spillane, James Addison, and Thomas P. Smith, Jr. of the New York Regional Office conducted the SEC investigation. The SEC also appreciated the assistance of the U.S. Attorney’s Office of the Special Inspector General for the Troubled Asset Relief Program.

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Real Estate Developer, Others Indicted in $6.7 M Loan Fraud

By Ogozi John

A real estate developer, his wife, and an accomplice, have been arrested and arraigned before a U.S. District Court on a 39-count charge of conspiracy.

According to the indictment, Ray Mubarak, 54, of Knoxville, Tenn., Dianna Mubarak, 52, Ray Mubarakof Knoxville, Tenn., and Blythe Bond Sanders, III, 35, of Norris, Tenn., were allegedly involved in a conspiracy that defrauded five banks of more than $6.7 million.

In a statement by Assistant U.S. Attorney Matthew Morris, it is alleged that Mubarak and his wife forged several documents that included tax forms and financial statements, which they submitted to banks for the receipt of loans and extended lines of credit. One line of credit obtained from Pinnacle Bank in Nashville totalled about $1.5 million.

Mubarak used two of his companies; Mubarak Properties and Tennessee Mortgage Connections to convince the banks that he needed these loans and lines of credit to enable him to purchase and make repairs to homes and real estate.

“Rather than using loan proceeds that defendant Ray M. Mubarak obtained from (the banks) for the reasons that he had stated and for which the loans had been approved, (he) used loan proceeds from loan payments, cash withdrawals and deposits into a Scottrade personal investment account, paying gambling debts and purchasing vehicles,” said Morris.

Blythe, a realtor, helped Mubarak in preparing loan documents “knowing that the said loan closing documents were false and fraudulent,” the indictment stated.

All three accused persons have pleaded not guilty to the charges before U.S. Magistrate Judge Bruce Guyton.

Stephen Johnson, Mubarak’s attorney, said: “Mr. Mubarak entered a plea of not guilty and we look forward to continuing to assist him in this matter.”

Trial in the case has been scheduled for May 5.

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Convicted Sacramento Businessman to Pay Millions in Restitution to Investors

By Ogozi John

At last, victims of the decade-long Ponzi scheme perpetrated by the now convicted Sacramento-based businessman, Deepal Wannakuwatte will finally have some reprieve, as a federal judge has ordered that he pays millions of dollars in restitution to the victims.

For more than 10 years, Wannakuwatte used several false claims to deceive his investors Deepal Wannakuwatteand lenders that they were putting in funds to support the growth and expansion of his companies. He succeeded in fraudulently obtaining more than $230 million from at least 150 victims that included individuals, businesses, government agencies and financial institutions.

It took more than one year of painstaking investigations by the FBI, Internal Revenue Service Criminal Investigation and the Department of Veterans Affairs Office of Inspector General, for law enforcement to finally unravel how the scheme worked.

Wannakuwatte told his victims that his companies, International Manufacturing Group (IMG) and Relyaid Global Health Care were doing business worth tens of millions of dollars in the manufacture and sales of latex gloves to federal agencies like the Department of Veterans Affairs (VA).

Wannakuwatte then offered several bogus high-yield investment opportunities to the investors and lenders, most of which were tied to his ‘juicy’ contract with the VA.

Although, IMG which had been in operation for more than 25 years actually had a business contract from the VA, it was worth about $25,000 a year. IMG had been running on huge losses for several years and Wannakuwatte was barely keeping the company afloat with proceeds of the scheme.

He mixed several false and authentic documents, overstated personal and business income, and set up conference calls between himself, investors and a fake representative of the VA, all in a bid to convince his victims to lend him money.

Initially, Wannakuwatte was able to make payments to some of the investors with the proceeds from the other businesses that he diverted their investments into, but he could not sustain these payments, as many of the investors began to suffer devastating losses, while Wannakuwatte bought luxury homes, vehicles, airplanes and even a professional tennis team.

Wannakuwatte, who pleaded guilty last year, is currently serving a 20-year sentence in a federal prison from where he has been ordered to pay millions in restitution to victims of his fraud scheme.

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Two Indicted in Multimillion Dollar Commercial Loan Fraud

By Vijay Daundkar

Abolghasseni “Abe” Alizadeh, 56, of Granite Bay, and Mary Sur Weaver, 62, of Roseville were today indicted in a 21 count indictment. They are charged with various counts of mail fraud, wire fraud and bank fraud. According to the announcement made today by the United States Attorney Benjamin B. Wagner, they are involved in various schemes that defrauded lenders in large commercial real estate transactions between 2004 and 2008.

Alizadeh is a property developer and was formerly the principal partner in Kobra Abe AlizadehProperties. The company owned several commercial real estate properties in Northern California. He also owned numerous restaurants, which included Jack in the Box, TGI Fridays, Sonic Burger, Qudoba Mexican Grills as well as other well known restaurants in the region.

Alizadeh allegedly owed $1.5 million in delinquent state taxes when a local franchise closed temporarily due to unpaid taxes in early 2009.  The local franchise restaurant is still owned officially by Kobra Propertise according to the Nevada County Tax Assessor’s office.  A representative of Kobra Properties said that the Jack in the Box restaurants will soon reopen under protection from a new Chapter 11 bankruptcy filing. Kobra Properties and several other entities owned by Alizadeh filed for bankruptcy in 2008. His total assets had an estimated value of $1 billion at one point. The other accomplice 62 year old Mary Sur Weaver was working as an escrow officer with Placer Title Company.

According to the court indictment, Alizadeh and Weaver hatched a conspiracy to get loans at inflated amounts on commercial and residential real estate. Alizadeh forged documents to carry out their plans. He would submit false information to federally insured banks to make it appear that he was buying the properties for a much higher price than the actual purchase price of the properties. He would often alter purchase contracts for million-dollar property purchases for that purpose. The court documents show that Weaver helped Alizadeh in his illegal activities in various ways. Weaver took money from other clients and temporarily moved the funds into accounts controlled by Alizadeh.

The case was investigated by the Federal Bureau of Investigation, the Criminal Investigation wing of the Internal Revenue Service and Federal Deposit Insurance Corporation Office of Inspector General. Assistant United States Attorneys Michael D. Anderson and Heiko P. Coppola are prosecuting the case. Alizadeh and Weaver are facing a maximum of 30 years in prison and a $1 million fine for each count.

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