Fridley Man Gets 2 Years for $1.9 Million Mortgage Fraud

A federal judge sentenced a Fridley man to two years in federal prison Tuesday for defrauding eight mortgage lenders of a total of $1.9 million over about one year. U.S. District Court Judge David S. Doty found Taleb Mohamed Wazwaz, 50, guilty on one count of conspiracy to commit mortgage fraud through the use of interstate wires.

Wazwaz pleaded guilty on May 4, 2010, to purchasing 12 Minneapolis properties at inflated prices and pocketing the rest of the borrowed money. The presentence investigation by the Federal Bureau of Investigation took about a year.

“In white-collar cases like this, they have to determine the amount of loss, especially when you have multiple financial victims,” said U.S. Attorney’s Office spokeswoman Jeanne Cooney. “That is a long time between the plea and the sentence, but it’s not totally unusual.”

Wazwaz committed the crimes between May 2005 and March 2006. The Federal Bureau of Investigation didn’t receive information on his conspiracy until April 19, 2010.

Mortgage Fraud a Foreclosure Trend
In each of the 12 property scams, Wazwaz borrowed more money than the property’s true asking price. After making payments on the properties for several months, he allowed the loans to go into default, causing the houses to be foreclosed.

Cooney said in the last several years, mortgage fraud cases have skyrocketed. The nationwide housing crisis with many homes being foreclosed has contributed to the mortgage fraud cases, she said.

Failure to Disclose to Lenders
In some instances, Wazwaz asked the sellers of the properties to sign purchase agreement addenda that obligated them to pay him the difference between the amounts borrowed from the bank and the properties’ true asking prices. Lenders never learned of the addenda.

Wazwaz also got down-payment assistance from a co-conspirator (who prosecutors did not indict), but no one disclosed that information to the lenders.

He also lied on mortgage loan applications, saying that he received rental income, that the property would be his primary residence, and that he had no other mortgage debt.

Fictitious Claims
Wazwaz induced the title companies to pay his company, Iman Sun Properties, INC., which he solely owns, more than the asking price of the property by including promissory notes in the title files that said the sellers owed his company liabilities and sums for “property management,” when in fact, they did not.

Through Iman Sun Properties, Wazwaz collected approximately $780,000.

Straw Buyers
Wazwaz also signed purchase agreements to buy properties from third parties for the true market values but then recruited straw buyers to purchase the properties for twice their market value. He had the title companies pay him “assignment fees” for these transactions.

Wazwaz received a total of approximately $1.15 million using straw buyers.

Federal vs. State Court
County attorneys conferred with the U.S. Attorney’s Office, District of Minnesota, to decide whether to take this case to state or federal court; tougher federal sentencing at the federal level won out.

“Sometimes, there are longer sentences for certain crimes at the federal level,” Cooney explained.

She added that at the federal level, there is no parole. Therefore, Wazwaz will have to serve a full two years in prison.

“In the federal system, he will be virtually behind bars that whole time,” Cooney said.

Local Foreclosures
In Fridley, there have been 164 foreclosures in the past year.

There are more foreclosured homes for sale this spring because banks have been holding on to the properties, not wanting to put them all out for sale at once, said Paul Bolin, assistant executive director for the Fridley Housing Redevelopment Authority.