Mortgage Daily

Published On: October 19, 2004
Trio Dupe Advanta, Flagstar & WaMu

Mortgage broker Mohammad Kakvand indicted in $27 mil condo scam

October 19, 2004


Federal authorities in Chicago say they’ve busted a $27.3 million mortgage fraud scheme that involved a mortgage broker, his associate and a real estate appraiser.The three have been indicted by a federal grand jury on charges of wire and bank fraud, according to a written statement from The United States Attorney for the Northern District of Illinois. Federal prosecutors said that over the last seven years the trio used bogus documents and phony straw buyers to fraudulently obtain millions of dollars in mortgage loans.

The defendants bought 32 apartment buildings in Rogers Park, South Shore and other Chicago neighborhoods, inflated the values on mortgage documents, recruited straw buyers and then kept portions of the loans obtained through the scam, prosecutors said.

Lenders were told that the defendants intended to convert the apartments into condominiums, and then sell the condos for profits.

“But lenders were unable to recover losses by foreclosing on the mortgage because some of the buildings were abandoned, in disrepair or lacked a functioning condominium association and building staff,” U.S. Attorney Patrick J. Fitzgerald said in the statement.

Mortgage broker Mohammad Taghie Kakvand, 52, also know as Mike Kakvand, of Park Ridge, Ill., was charged with wire fraud and eight counts of bank fraud, prosecutors said. He is a licensed broker and primarily bought apartment buildings through his business, Residential Realty Development Inc.

Syed Ali Mohammed Razvi, 39, who was identified as allegedly assisting Kakvand in his mortgage business, was also charged with wire fraud and four counts of bank fraud.

Thomas M. Groh, 57, a licensed real estate appraiser doing business as Universal Appraisal Service, was charged with wire fraud.

According to prosecutors Groh “participated in the scheme by preparing appraisal reports that misrepresented the current conditions and inflated fair market value of the condominiums that Kakvand was trying to sell.”

A fourth person, Jan Rozycki, also known as Jarek Kozla, was named as a “co-schemer” in the fraud but was not indicted, prosecutors said. He has recently pleaded guilty in a separate mortgage fraud case in U.S. District Court in Rockford, Ill., and admitted his role in the scheme, prosecutors said.

None of the defendants could be reached to comment.

Wire and bank fraud carry a maximum term of 30 years in prison and a fine of $1 million. Federal authorities are also seeking forfeiture of $27.3 million from Kakvand and Razvi.

According to the indictment the fraud allegedly took place from 1997 until August of this year. Mortgage lenders hit by the scheme were Advanta National Bank, Advanta Mortgage, Flagstar Bank, Homeside Lending Inc., Life Bank and Washington Mutual Bank.

Prosecutors painted a picture of how the scheme worked.

Kakvand and Rozycki recruited straw buyers to purchase condos in their apartment buildings, enticing them with promises they would not have to put up any of their own money. The buyers were also offered “thousands of dollars for each unit they agreed to buy.”

Buyers were allegedly told they would not have to make any down payments, mortgage payments or any other payments. Often buyers were referred to Kakvand for mortgage loans.

“Kakvand and Razvi allegedly prepared and caused others to prepare fraudulent mortgage applications containing false statements regarding the buyers’ employment, income, assets and liabilities and other information to obtain loans,” prosecutors said. “

Lenders weren’t told that the buyers did not intend to own the condos, live in them or pay off the mortgage, authorities said.

“On some occasions Razvi and Rozycki posed as the sellers of the condominiums at closings when, in fact, Kakvand was the true owner and seller,” prosecutors said. “Kakvand and his co-schemers received the mortgage loan proceeds at closings and then allegedly used the money for themselves and to keep the scheme going.”

Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: [email protected]

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