Preet Bharara, the U.S. Attorney for the Southern District of New York, has announced that David Ramnauth, former president of GuyAmerican Funding Corporation, a mortgage brokerage firm in Queens, N.Y., has pled guilty to conspiracy to commit bank and wire fraud. Ramnauth was charged in a Superseding Indictment along with eight other defendants for their participation in a scheme that defrauded banks out of more than $23 million in home mortgage loans.
According to the Superseding Indictment and statements made during the proceedings in this case before U.S. District Judge Shira A. Scheindlin:
Ramnauth, president of GuyAmerican Funding, facilitated a massive mortgage fraud scheme that was being conducted through a GuyAmerican branch office located on Liberty Avenue, in Jamaica, N.Y. Three of the defendants charged in the scheme, Peggy Persaud, Orette Killikelly and George Esso were loan officers at GuyAmerican, and received thousands of dollars in commissions based on fraudulent loan applications submitted to lenders.
Three other defendants charged in the scheme, Elton Lord, Rafick Baksh and Mahamood Hussain worked with GuyAmerican loan officers to recruit homeowners in financial distress who were willing to sell their homes. They used "straw buyers," persons who posed as homebuyers in exchange for a fee, but who had no intention of living in the mortgaged properties, to perpetrate the scheme. The defendants arranged home sales between these distressed sellers and these straw buyers, and obtained mortgage loans using fraudulent representations, including about the supposed purchasers' net worth, employment, and income.
The defendants re-sold, or flipped, properties multiple times between different straw buyers, stripping the equity from those properties as they were resold with inflated market values. For example, a property purchased by a straw buyer in December 2006 in Queens, New York, for $355,000 was resold to another straw buyer in April 2007—only four months later—for $680,000, with the profit going to the defendants and their co-conspirators. In addition, the defendants often arranged for a single straw buyer to purchase multiple properties within days or weeks of each other, without disclosing the prior purchases on the subsequent loan applications.
The loan applications submitted to the lenders contained numerous false statements about the straw buyers, who often had little or no assets and modest or no incomes. The loan applications therefore contained false statements about the supposed borrowers' employment, income, assets, and existing debt. In addition, the loan applications falsely represented that the straw buyers intended to reside in the properties, when in fact they did not. Two others acted as the closing attorneys for most of the transactions and facilitated the fraud by disbursing illicit payments to co-conspirators.
After becoming aware that fraudulent loans were being submitted under the GuyAmerican license, Ramnauth directed through a loan officer at GuyAmerican to have the closing attorneys set aside six months' worth of mortgage payments from the closing proceeds, so that the lenders would not discover the scheme. Ramnauth was also aware that LORD, Baksh, and Hussain were engaging in equity stripping in the sham real estate transactions, but permitted them to originate additional fraudulent loans under the GuyAmerican license, and continued to make commission payments to loan officers in connection with the fraudulent loans.
Ramnauth of Levittown, N.Y., faces a maximum penalty of 30 years in prison. He will also be required to forfeit the proceeds of his offenses. Persaud, Killikelly and Lord previously pled guilty. Defendants Baksh and Hussain remain at large.
Manhattan U.S. Attorney Bharara praised the investigative work of the Federal Bureau of Investigation (FBI) and the New York State Banking Department, and thanked them for their assistance in this case.
For more information, visit http://newyork.fbi.gov.