New York,An Indian-origin man is among six persons
charged with carrying out a USD 30 million bank fraud conspiracy and faces up
to 30 years in prison if convicted.Manjeet Bawa, 46, of New York and other
co-defendants contracted to buy homes in Nassau and Suffolk Counties from
innocent sellers at market prices.The defendants then submitted fraudulent loan
applications to the warehouse lenders that nearly doubled the true sales prices
of the homes.
The defendants also inflated their personal assets and
concealed significant liabilities to get loan approval.
The six defendants face up to 30 years’
imprisonment and could be ordered to forfeit 19 residential properties traced
to the bank fraud or up to USD 30 million dollars in a money judgment.According
to the indictment and other court filings, between 2003 and 2008, the main
defendant Aaron Wider, 50, operated a New York State licensed mortgage bank
HTFC, which issued residential mortgages to borrowers.HTFC did not possess
assets to fund these loans but relied on funding from other banks and financial
institutions, commonly known as “warehouse lenders”.
The warehouse lenders relied on Wider and HTFC to ensure
that home buyers were able to pay the mortgages and that the market value of
the homes fully collateralised the loans.Instead, Wider and the co-defendants
allegedly engineered a complex series of same-day sham transactions, or
“flips”, to artificially inflate the prices of homes.They then lied to the
warehouse lenders to obtain mortgage funding that was 80 per cent more than the
actual value of the homes, according to court filings.“The conduct charged in
the indictment is a prime example of the type of corrupt mortgage-lending
practices that preceded the bursting of the real estate bubble, the loss of
faith in securitised mortgage obligations and the financial collapse of 2007
and 2008,” US Attorney Loretta Lynch said.
“Instead of using their skills in banking, the law and
investing to assist individuals pursuing the American Dream, the defendants
cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt
to the investigating public at large in the secondary mortgage market,”
he said.
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