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12 of 14 Defendants in MN Case Have Same Last Name

2-year sentence for Taleb Mohamed Wazwaz in $1.9 million case

May 4, 2011

By DAVID HANNERS Pioneer Press - McClatchy-Tribune Information Services

A Minnesota man was handed down a two-year sentence for his role in a $1.9 million mortgage fraud case. Out of 14 defendants, 12 have the same last name.

Even before Fridley businessman Taleb Mohamed Wazwaz walked out of federal prison in March 2009 after doing time for conspiracy to hide cigarette sales tax revenues, prosecutors were pretty sure he'd be back.

They were right. On Tuesday, a federal judge sentenced Wazwaz, 44, to two years in prison for his role in a mortgage fraud scheme that defrauded eight lenders of more than $1.9 million.

U.S. District Judge David Doty also ordered him to pay restitution for the full amount. He'll pay $25 every three months while he's in prison and $200 a month once he's released; at that rate, it will take more than 800 years to repay the money.

The sentence was longer than the 18 months a federal prosecutor had recommended after lauding Wazwaz's "substantial" cooperation with investigators. And it was stiffer than the probation the man's defense attorney requested.

Given a chance to speak before sentencing, Wazwaz told Doty that he hadn't meant to break the law and got caught up in a scheme that got out of control.

"I'm totally in disbelief that I'm even here," he told the judge. "This whole thing was nonsense."

In a letter to the judge last month, Wazwaz acknowledged his crime and apologized. "The whole era of the past is over and I (am) no longer involved with mortgages or investments," he wrote. "I am very sorry about my decisions and affiliations with any person that aided my wrong actions during the mortgage investment period."

He wrote that he wanted "to be on the right path legally, spiritually, and mentally."

But Assistant U.S. Attorney David MacLaughlin countered that while Wazwaz was due some consideration for being cooperative, probation would be too lenient.

"It's about sentences that promote respect for the law," he told the judge, noting that Wazwaz pocketed $1.4 million of the $1.9 million he scammed. "This is a big offense."

He noted that the pre-sentence report compiled on Wazwaz listed $5.3 million "of debt which is never going to be repaid. There's a ton of damage here, and the sentence should reflect that damage."

The case has a somewhat disjointed history. In 2006, Wazwaz and several members of his family were indicted in an alleged conspiracy to cheat the state out of sales tax revenue from cigarettes they sold at tobacco shops they owned. Wazwaz wound up pleading guilty in 2007 to his role in the $2.5 million scheme and was sentenced to 15 months.

During that probe, investigators uncovered a mortgage fraud scheme involving Wazwaz, two of his brothers, some cousins and others. The indictment that followed in February 2007 named 14 defendants, 12 of whom have the last name Wazwaz.

Prosecutors offered deals to the three Wazwaz brothers -- Taleb, Sabry Mohamed and Kennedy Mohamed. The offer: enter pleas to both the cigarette and mortgage fraud cases and be sentenced at the same time, or just be sentenced on the cigarette tax case and face prosecution later on the mortgage fraud.

Sabry Wazwaz, 34, of Brooklyn Park, and Kennedy Wazwaz, 46, of Fridley, took the deal; Sabry was sentenced to 42 months in prison and Kennedy got 30 months.

Taleb Wazwaz rejected the deal, though. While he got a 15-month sentence in the tobacco case, prosecutors said he'd be indicted separately in the mortgage fraud case. The government claimed the mortgage fraud scheme he was involved with was more serious and involved greater losses than his brothers' scheme.

As a result, Wazwaz was charged in April 2010 on a count of conspiracy to commit mortgage fraud through the use of interstate wires. The scheme involved the purchases of 11 properties in Minneapolis and one in St. Paul.

At its simplest, mortgage fraud is a five-step process. The first step: The conspirators find a property for sale and have an appraiser -- who is in on the scheme -- appraise it for more than it is worth. Next, they find a straw buyer, someone who often is in on the scam and has no intention to own the home. In these instances, Wazwaz was the straw buyer.

The third step: The straw buyer fills out a loan application for the inflated value of the property; generally, the buyer fudges his income and other information to better qualify for the loan. In some instances cited in Wazwaz's case, he recruited straw buyers who bought condos for double their fair market value.

Next, the buyer closes on the property, gets the loan check and the conspirators divvy up the dough.

Finally, the straw buyer defaults on the loan, and the property goes into foreclosure.

Prosecutors said the scheme netted $1.9 million in loans, and Wazwaz kept $1.4 million and paid about $500,000 to his co-conspirators.

Only one other person was charged with Wazwaz in his case. Genevieve Marie McCullough, 32, of Inver Grove Heights, was a closing agent for a title company.

She pleaded guilty in September of conspiracy to commit mortgage fraud.

No date for her sentencing has been set.

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Copyright (c) 2011, Pioneer Press, St. Paul, Minn.

Distributed by McClatchy-Tribune Information Services.

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This story was distributed by TNS - Tribune News Service
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