A former mortgage executive who is under indictment for selling the same loans multiple times on the secondary market escaped when federal agents tried to nab him.
Edward Batayeh, who is also known as Ed Bhataybh, has been indicted by a federal grand jury in Oakland on charges of masterminding a $13 million fraud that included reselling loans multiple times.
But when federal agents tried to apprehend him on Nov. 17, he fled in a 2003 BMW X3 with the California license plate 5ETZ317.
“Defendant is a fugitive and should be considered armed and dangerous,” the U.S. Attorney for the Northern District of California said in a statement.
Batayeh, 39, is the former executive vice president and chief financial officer of CHL Mortgage. Prosecutors said that between March 2000 and December 2004 he defrauded four financial institutions by “double banking” loans, or “selling variations of the same loan to multiple investors without the investors’ knowledge.”
The institutions hit by the alleged scam, and the amount of money each lost, are: Gateway Bank, $6.2 million; Aurora Loan Services, $1.74 million; First Collateral, $2.7 million; and First Horizon Loan Corp., $2.3 million.
If caught and convicted Batayeh faces more than 30 years in prison and fines of more than $1.5 million.
Prosecutors say he allegedly carried out his conspiracy by sending fraudulent loan packages to financial institutions without the property owners’ knowledge. The packages included mortgage notes, deeds of trust, loan applications and verifications of employment.
An example of how the alleged scheme worked is included in the eight-page indictment.
In November 2003 Batayeh said a loan package from CHL to GreenPoint Mortgage Funding. One month later CHL received a check for $412,760 from a title company. The check was deposited into a bank account.
In either March or April a woman whose name was on the mortgage received a notice that she had a second loan on her property. The woman, according to the indictment, was told by a CHL employee that the notice was sent by mistake.
Then in August a CHL employee purchased a home in San Ramon, CA., in the name of the woman, then quickly received another loan on the property, the indictment charges.
“It was further part of the conspiracy that to further conceal the bank fraud, (Batayeh) and others told individuals listed on the fraudulently obtained mortgages who received notices of the fraudulent loans that it was an error that CHL would correct,” according to the indictment.
Batayeh also allegedly sent a false resume to Aurora Loan Services, one of the financial institutions duped in the scheme.
Anyone with information about Batayeh’s whereabouts is asked to contact the FBI at 415.553.7400.
$13 Million Secondary Fraud
A California mortgage broker made fake loans against homes without the knowledge of the property owners, then sold those loans on the secondary market multiple times.