Ashburn Businessman Pleads Guilty in Mortgage Fraud Scheme

Sign up for the Ashburn Patch newsletter!

An Ashburn businessman pleaded guilty Friday in federal court in a real estate fraud scheme that netted nearly $1 million, according to federal prosecutors.

Danny Zhao, 36, faces up to five years in prison for conspiracy to commit bank fraud, said a statement from the U.S. Attorney’s Office for the Eastern District of Virginia. He is scheduled to be sentenced May 15 by U.S. District Judge Leonie Brinkema in the federal court in Alexandria.

According to a statement of facts filed with the plea agreement, Zhao acted as a Realtor in fraudulent real estate short sale transactions involving Legacy Investment Group, a company owned by his wife. Zhao fraudulently induced mortgage lenders to approve sales of property for amounts less than what was owed, the U.S Attorney’s Office said.

To do this, Zhao forged the signatures and initials of homeowners in mortgage documents. He also sent false hardship letters and financial statements to lenders.

More on Patch:

• ICYMI: Repo Man Accused of Brandishing Gun
• Pedestrian Injured When Driver Loses Control in Bad Weather
• Bank Robbers Caught on Surveillance Video

Moreover, Zhao failed to disclose material information about his relationship to the owner of Legacy and made misleading representations that the short sales would be “arm’s length” transactions, the U.S Attorney’s Office said.

Zhao participated in six fraudulent short sale transactions resulting in losses to mortgage lenders of about $924,529. Zhao and his family profited by about $200,000, the U.S Attorney’s Office said.