Tag Archives: fraud

CEO Sentenced For Investment Fraud

The CEO and founder of Heaven Investments Holdings Corporation (“Heaven Investments”), a Sacramento-based investment company, was sentenced to four years in prison for investment fraud.

Akbar Bhamani was sentenced in federal court in Sacramento.
Heaven Investments, utilizing a website and some investor forums, raised more than $30 million from investors, across the country, to invest in a real estate exchange program. The company never obtained a license to offer the investments it was selling.

Heaven Investments guaranteed up to 13 percent annual interest and the tax advantages of 1031 real estate exchanges.

Leave a comment

Filed under A Need to Know Basis, Consider the Law

Renter Title Fraud, as Reported by Stewart Title

A sophisticated title fraud scheme involving residential rental properties reportedly in the Los Angeles area occur anywhere and thus it is important to be aware of the scheme.

The typical fact pattern:

The perpetrators initially obtain title searches to identify rental homes that have no mortgages or small mortgages on them. Using fake identification and documentation, the perpetrators initially pose as renters for these properties. They enter into a lease with the real owners of the properties, and pay a security deposit and the first month’s rent.

The perpetrators then steal the identity of the real owner. The perpetrators use a different set of high quality fake identification, which may include counterfeit passports and drivers licenses, to impersonate the owner and apply for a home equity loan. The perpetrators may also order appraisals of the property.

The perpetrators usually seek a loan from a “hard money” lender.  Hard money lenders provide short term (bridge) loans based upon the value of the real estate, the amount of equity, and the potential salability of the property, rather than the creditworthiness and income of the borrower. Since the loan underwriting is based primarily on the value of the real estate, the loan-to-value ratio is usually lower than a typical loan (e.g., not more than 65%).  Hard money loans are often for shorter periods and higher interest rates than traditional loans.  A hard money lender may not perform a standard credit evaluation or require the customary income and asset verification ordinarily required by a traditional lender.

Prior to the closing, the perpetrators also set up new bank accounts in the names of the real owners. The perpetrators appear at the loan closing, posing as the true owners.  When the loans are funded, the settlement providers are instructed to transfer the proceeds to these bogus accounts. Thereafter, the money is withdrawn in small amounts by check or in cash.

The real owners may remain unaware of the scheme until they receive a notice of default or foreclosure from the lender.

This scheme is sophisticated.  A raid on one group of people suspected of perpetuating this fraud found several pre-paid cell phones lined up, each labeled with the name and home address of different homeowners.  Fake email addresses were also reported to be involved.

The following are some common factors that may assist in identifying this type of fraud:

  • Residential rental property;
  • No existing mortgage or small mortgage;
  • Loan transaction only, without a simultaneous purchase or payoff of a large existing loan;
  • Hard money or other non-traditional financing (e.g., no income verification).

Leave a comment

Filed under A Need to Know Basis