After two years on the run, Indian authorities have apprehended one of two brothers that allegedly sold loans with fraudulent documentation to three U.S. lenders. According to Assistant U.S. attorney Steven M. Biskupic, Rajiv C. Shah, president and part-owner of Midwest Mortgage Company, was arrested in New Delhi, India last month. Shah’s brother, Sanjiv C. Shah, who was vice-president and part-owner of Midwest, remains a fugitive.
A copy of the six count ‘Superseding Indictment’ provided to MortgageDaily.com says that the two brothers operated Midwest as a mortgage banker with branches also in Illinois, Indiana, Colorado and Texas. The brothers allegedly falsified loan payment histories, falsified credit histories and forged borrowers’ signatures on more than 300 loans to subprime borrowers. Both face 1 count of ‘Bank Fraud Conspiracy’, 4 counts of ‘Bank Fraud’ and 1 count of ‘Money Laundering Conspiracy’.
Among the defrauded lenders were Key Bank, First Union Bank and Bank One. The alleged fraud activity included using a computer to alter and improve the credit report on one application, and using ‘white-out’ to reflect that no bankruptcy had been filed on another previously bankrupt borrower’s application.
Biskupic, from the U.S. Attorney’s office, told MortgageDaily.com that the average mortgage loan involved in the scheme was probably between $30k and $50k. This would put the dollar amount of loans allegedly involving fraud at $9-$15 million, of which only a portion is likely to default.
Sanjiv is accused of unlawfully wiring $1.2 million to the Bank of India account at Chase Manhattan Bank in February 2001. Additionally, the brothers are accused of wiring $302,550 to the bank account of Chhaya Shah, one of the brothers’ spouse.
A distant relative, Yogesh Shah, fled the country after his trial after his similar, but unrelated case began, according to the U.S. Attorney. Yogesh was allegedly involved in a rent-to-own scheme where he contracted with builders and provided construction funding.
The Milwaukee Journal Sentinel reported that the brothers planned to build one of the largest mansions ever in the Milwaukee area. The mansion was to include a virtual-golf room in the basement, an indoor swimming pool, a Hindu temple and 24,000 square feet of space.
While both brothers were not U.S. citizens, they lived here legally.
Biskupic told MortgageDaily.com that extraditing Rajiv to the U.S. requires the cooperation of the U.S. State Department, the Indian embassy, the Indian government and the U.S. Attorney’s office. He indicated that in cases like this, it could take months or even years to complete the extradition.
Biskupic said that Rajiv faces a maximum of 55 years in prison.
