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Two nabbed in $2.5 million Twin Cities fraud scheme

NationalMortgageProfessional.com
Jun 11, 2010

A mortgage broker and real estate closing agent in the Twin Cities have been indicted in federal court for allegedly orchestrating a mortgage fraud scheme that resulted in a $2.5 million loss for financial lenders. The indictment, filed in U.S. District Court in St. Paul, Minn., charged Fawaz Mahmoud Wazwaz and Genevieve Marie McCullough of Inver Grove Heights, Minn., with one count of conspiracy to commit mortgage fraud by commercial carrier and interstate wire, six counts of mortgage fraud through interstate wire, and one count of mortgage fraud through use of commercial interstate carrier. The indictment alleges that from 2004 through 2006, the defendants conspired to defraud mortgage lending institutions out of money. During that time, Wazwaz was employed as a loan officer, primarily at Commonsense Mortgage Inc., a mortgage brokerage business in Shoreview, Minn. In his professional capacity, he originated mortgage loans by finding borrowers, preparing loan applications for those borrowers, and submitting those applications to lenders. McCullough, on the other hand, was employed as a real estate closer with two different title companies during this time period. At both companies, she prepared and oversaw the closing of real estate transactions. The object of the defendants’ alleged conspiracy was to recruit straw buyers to purchase homes in the Twin Cities at inflated prices. The money to pay for those homes was acquired from area lenders, purportedly based on fraudulent loan applications. When loan proceeds were made available at transaction closings, portions of those funds were reportedly distributed to Wazwaz and others involved in the conspiracy. The indictment states that between Jan. 24 and Sept. 15, 2005, the defendants participated in the fraudulent purchase of 14 residences in Minneapolis, four in St. Paul, and one in Fridley, Minn. totaling approximately $2.5 million in losses to financial lenders. To accomplish this fraud, Wazwaz allegedly arranged for an unindicted appraiser to prepare appraisals supporting the inflated home prices. He also purportedly caused lenders to receive false loan applications. Moreover, he reportedly provided downpayments to straw buyers without disclosing that assistance to the lenders. Finally, according to the indictment, he arranged for McCullough to close the real estate transactions. For her part, McCullough allegedly provided false documents, including false HUD-1 settlement statements, to the lenders and routinely violated the settlement instructions in those documents. She also purportedly closed the fraudulent real estate transactions for above-average fees, which she retained. Furthermore, the indictment states she disbursed some of the mortgage loan proceeds, usually the amounts over and above the true sale prices, to Wazwaz, the straw buyers, and others. In addition, she allegedly disbursed to her co-conspirators portions of the loan proceeds actually meant to go to the property sellers. If convicted, the defendants face a potential maximum penalty of five years in prison on the conspiracy charge and 20 years on each mortgage fraud count. All sentences will be determined by a federal district court judge. On May 4, 2010, Taleb Wazwaz pleaded guilty for his role as a straw buyer in this fraud scheme. Specifically, he pled to one count of conspiracy to commit mortgage fraud by interstate wire. This case is the result of an investigation by the Federal Bureau of Investigation (FBI) and is being prosecuted by Assistant United States Attorney David J. MacLaughlin. For more information, visit http://minneapolis.fbi.gov.
Published
Jun 11, 2010
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