They nailed these guys for fraud….but only 18 months in jail? This is more than your standard short-sale fraud, and I’m surprised this doesn’t happen more often. They just sent in a forged bank reconveyance showing that the mortgage had been paid (when it wasn’t), and then sold the property.
A Carlsbad real estate broker and his brother were sentenced Monday to prison terms for their roles in a fraudulent “debt elimination” scheme that purported to eliminate the mortgages on several million-dollar homes in Del Mar, La Jolla and San Diego.
U.S. District Judge John Houston sentenced Adel Afkarian, 43, of Carlsbad, to 18 months in custody and Atef Afkarian, 41, of Slidell, Louisiana, to 13 months. In addition to the time in custody, the brothers were both ordered to pay more than $5.5 million in restitution to the victims of the scheme.
To implement the scheme, the Afkarians identified underwater homeowners — including themselves — and began a process to make it appear as though the homeowners’ debts had been satisfied.
To do so, they recorded fraudulent deeds that purported to extinguish the large mortgage loans encumbering each property.
Working through entities known as The Better Mortgage Company and Elite Coast Realty, the defendants then sold the properties to innocent purchasers, deceiving the buyers into paying the full purchase price to the Afkarians or their co-conspirators. The mortgage lenders, unaware of the fraudulent documents recorded on title or unable to prevent the sale in time, were left unpaid.
With regard to their own underwater home, the Afkarians pretended that $1.4 million in mortgage debt had vanished, prosecutors said.
The defendants used the “debt elimination” method to successfully arrange the fraudulent sale of four properties, generating more than $4.3 million in proceeds which went directly into bank accounts of the brothers and their co-conspirators.
In some cases, the brothers sold the fraudulent “debt elimination” program to existing clients of their mortgage business, according to prosecutors.
In addition to the “debt elimination” scheme, the Afkarians also conspired to arrange fraudulent short sales for underwater clients through a simultaneous “double escrow” scheme.
Rather than selling an underwater home at a pre-approved short sale price, the defendants arranged two simultaneous sales of the same property at two sale prices, using a straw buyer as the intermediary and purported seller in the second transaction.
That way, the short sale lender would believe that the property was being sold for the initial first escrow price, rather than the higher second escrow price. The defendants and their co-conspirators would then pocket the difference, diverting money from the lenders.
The Afkarians each pleaded guilty in September 2013. As part of their pleas, they also agreed to forfeit a home on Santa Fe Canyon Place in Torrey Santa Fe, which they had purchased using about $715,000 in proceeds from the fraud, and an additional $388,000 recovered from bank accounts where they had transferred proceeds.
Huh. Article says they generated 4.3 million and only had to give back a house and give up some cash — totaling about 1.1 million. So there is about 3.2 million unaccounted for. I suspect a lot of people would gladly do 18 months in exchange for 3.2 million. But crime doesn’t pay.
And you are right, this is far far beyond the run-of-the-mill “trick the bank” short sale shenanigans.
The minute I saw the name “Atef Afkarian,” I knew he had to be from Louisiana!
Ah, those crazy Armenians.
LOL, You guys are all crazy and wrong. I know of these guys and they are very good people. What you’re reading is only a part of the story and doesn’t tell who and why. Atef is from San Diego and recently moved for some personal reasons non-related to this case and they are NOT Armenians.
I don’t blame people passing judgement based on this article but I hate how they’ve become the escape goat for a much larger problem involving the banks.
Larger problems get sorted out with perp walks – bankers included.
But these guys forged reconveyance paperwork, and then deliberately resold properties that we still encumbered with loans. You can’t blame that on anyone but them.
@Jeremy Knight
The judge heard all about the “Who and Why” and sentenced them to time in jail. The judge determined being a good person was irrelevant to breaking the law.
But I applaud your effort to defend your friends against the vicious onslaught of internet comments hosted by a real estate blog.
This was not just some simple case, this was in Federal Court and also included Conspiracy to Commit Mail Fraud and Wire Fraud: http://mortgagefraudblog.com/wp-content/uploads/2013/10/Afkariansuperindict.pdf
And investigating agencies included the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS) – Criminal Investigation
Jeremy, you got a problem with Armenians?
That’s right, Daniel. I was thinking the same exact thing!
Hey, Jeremy, why don’t you move to Palmdale, where you belong?
Now, now.