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PREET BHARARA, the United States Attorney for the
Southern District of New York, JOSEPH M. DEMAREST, JR., the
Assistant Director-in-Charge of the New York Field Division of
the Federal Bureau of Investigation (“FBI”), and RICHARD H.
NEIMAN, the Superintendent of Banks for New York State, announced
today the surrender of DAVID RAMNAUTH, the President of
GuyAmerican Funding Corp., in connection with a scheme that
defrauded banks out of more than $23 million in home mortgage
loans. RAMNAUTH is charged in a Superseding Indictment with bank
fraud and wire charges along with eight other defendants who were
previously charged in the same scheme in October 2009.
According to the Superseding Indictment previously
filed in Manhattan federal court and unsealed today:
DAVID RAMNAUTH was the President and owner of
GuyAmerican Funding Corp., a mortgage brokerage firm in Queens,
New York. RAMNAUTH facilitated a massive mortgage fraud scheme
that was being conducted though a GuyAmerican branch office
located on Liberty Avenue, in Jamaica, New York. Three of the
defendants previously charged in the scheme, PEGGY PERSAUD,
ORETTE KILLIKELLY, and GEORGE ESSO, were loan officers at
GuyAmerican, and received thousands of dollars in commissions
based on fraudulent loan applications submitted to lenders.
Three other defendants previously charged in the
scheme, ELTON LORD, RAFICK BAKSH, and MAHAMOOD HUSSAIN, worked
with GuyAmerican loan officers to recruit homeowners in financial
distress who were willing to sell their homes. They used “straw
buyers” — persons who posed as home buyers in exchange for a
fee, but who had no intention to live in the mortgaged properties
to perpetrate their scheme. The defendants arranged home sales
between these distressed sellers and these straw buyers, and
obtained mortgage loans using fraudulent representations,
including about the supposed purchasers’ net worth, employment,
and income. The defendants re-sold, or flipped, properties
multiple times between different straw buyers, stripping the
equity from those properties as they were resold with inflated
market values. For example, a property, purchased by a straw
buyer in December 2006 in Queens, New York, for $355,000 was
resold to another straw buyer in April 2007 — only four months
later — for $680,000, with the profit going to the defendants
and their co-conspirators. In addition, the defendants often
arranged for a single straw buyer to purchase multiple properties
within days or weeks of each other, without disclosing the prior
purchases on the subsequent loan applications.
The loan applications submitted to the lenders
contained numerous false statements about the straw buyers, who
often had little or no assets and modest or no incomes. The loan
applications therefore contained false statements about the
supposed borrowers’ employment, income, assets, and exiting debt.
In addition, the loan applications falsely represented that the
straw buyers intended to reside in the properties, when in fact
they did not. CHEDDI GOBERDHAN and RAVI PERSAUD, who acted as
the closing attorneys for most of the transactions and
facilitated the fraud by disbursing illicit payments to
co-conspirators, were also previously charged.
After becoming aware that fraudulent loans were being
submitted under the GuyAmerican license, RAMNAUTH directed
through a loan officer at GuyAmerican to have the closing
attorneys set aside six months’ worth of mortgage pavements from
the closing proceeds, so that the lenders would not discover the
scheme. RAMNAUTH was also aware that LORD, BAKSH, and HUSSAIN
were engaging in equity stripping in the sham real estate
transactions, but permitted them to originate additional
fraudulent loans under the GuyAmerican license, and continued to
make commission payments to loan officers in connection with the
fraudulent loans.
RAMNAUTH, 54, of Levittown, New York, surrendered this
morning and is expected to be presented later today in Manhattan
federal court before United States Magistrate Judge ANDREW J.
PECK. RAMNAUTH is charged with conspiracy to commit bank fraud
and wire fraud. If convicted, he faces a maximum sentence of 30
years in prison.
PREET BHARARA, the United States Attorney for the
Southern District of New York, said: “The alleged fraud at
GuyAmerican went all the way to the top, costing the firm’s
lending institutions more than $23 million. That’s $23 million
that the banks could not lend to honest, hard-working people
looking to buy homes. These allegations are a stark reminder of
the damage that corrupt mortgage firms can do, particularly in
troubled economic times.”
JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge
of the New York Field Division of the FBI, said: “Today’s arrest
on the Superseding Indictment are but the latest benchmarks in
the FBI’s ongoing aggressive campaign to police and prevent
mortgage fraud in New York. The real estate market is one of the
linchpins of the economy. Cracking down on mortgage fraud can
rightly be viewed as an integral part of economic recovery.”
RICHARD H. NEIMAN, the Superintendent of Banks for New
York State, said: “A key factor contributing to the ongoing
mortgage crisis is the failure of some gatekeepers — including
mortgage brokers. Unfortunately, instead of acting in the best
interest of consumers and the industry, in some cases, they
abused their positions and joined criminal schemes to steal
millions of dollars. The Banking Department’s Criminal
Investigation Bureau will continue to work with our law
enforcement partners to pursue individuals that, through
fraudulent activities, attempt to undermine the financial
system.”
This case was part of the coordinated takedown of
“Operation Bad Deeds,” a joint federal, state, and local law
enforcement operation targeting mortgage fraud crimes, announced
on October 15, 2009, in which 41 defendants were charged in
various mortgage fraud scams in New York, Pennsylvania, Ohio, and
North Carolina. Eight of the defendants charged in the
Superseding Indictment unsealed today were also the subject of
charges in an Indictment unsealed on October 15, 2009.
The prosecution of the cases arising from “Operation
Bad Deeds” is being overseen by the Office’s newly-formed Complex
Frauds Unit. The prosecution of this case is being handled by
ANTONIA M. APPS.
The charges contained in the various charging
instruments discussed above are merely accusations, and the
defendants are presumed innocent unless and until proven guilty.
09-408 ###
