Two Orange County, Calif., men were sentenced Tuesday, June 5, to federal prison for their part in a mortgage scheme that led to the fraudulent purchase of more then 100 condominium units and $10 million in losses.
Maher Obagi, 32, of Huntington Beach, was sentenced to 78 months and was ordered to pay more than $10 million in restitution. The second man, Mohamed Salah, 43, of Mission Viejo, was sentenced to 57 months and has to pay $7 million in restitution.
After the 2015 trial, Obagi was found guilty of one count of conspiracy and three counts of wire fraud. Salah was found guilty of one count of conspiracy.
The crime, described by authorities as a “builder bailout” scheme, was operated by Obagi, Salah and several others through Excel Investments and related companies based in Santa Ana and Irvine.
“The scheme involved kickbacks from condominium builders during the 2008 financial crisis, kickbacks that were hidden from lenders to convince them to fund loans in excess of actual purchase price,” according to a United States Attorney’s Office statement.
The co-conspirators bought condominium units at a discounted price from struggling developers. The developers would benefit because it appeared to the units were successfully selling and maintaining value while the co-conspirators collected substantial commissions.
The members involved in the scheme bought units in California, Arizona and Florida for themselves, their relatives and on behalf of “straw buyers” who were people they brought into the scheme. These buyers were targeted for having good credit scores and recruited under the guise that it was an investment opportunity that required no down payment and would generate rental income.
To pay for the mortgages, authorities say the conspirators also used false information, including fake employment and income, and fabricated documents, such as altered pay stubs, W-2 forms and bank statements.
“The mortgage applications also included false information about the terms of the transactions, such as concealing the large kickbacks from lenders through false and misleading HUD-1 forms,” the attorney’s office said.
The lenders lost more than $10 million after the loans went into default and they foreclosed on the properties.
Many of the loans were purchased on the secondary mortgage market by the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association, which lost at least $1.3 million to defaults and foreclosures, authorities said.
Five others were also charged for their part in the scheme.
Tribune Content Agency