Businessman Admits Role in $1M Short Sale Mortgage Fraud Conspiracy

Allison Tussey —  March 2, 2015 — Leave a comment

Danny Zhao, 36, Ashburn, Virginia, pleaded guilty to conspiracy to commit bank fraud admitting his role in a short sale mortgage fraud scheme.

Zhao faces a maximum period of five years of imprisonment when he is sentenced on May 15, 2015. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

According to the statement of facts filed along with the plea agreement, Zhao acted as a real estate agent in fraudulent real estate short sale transactions involving Legacy Investment Group, a company owned by his wife. Zhao fraudulently induced mortgage lenders to approve sales of property for amounts less than what was owed.

In order to do so, Zhao forged the signatures and initials of homeowners in mortgage documents. Zhao also sent false hardship letters and financial statements to lenders. Moreover, Zhao failed to disclose material information about his relationship to the owner of Legacy and made misleading representations that the short sales would be arm’s length transactions.

Zhao participated in six fraudulent short sale transactions resulting in mortgage lenders losses of approximately $924,529. Zhao and his family profited approximately $200,000.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia, and Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the plea was accepted by U.S. District Judge Leonie M. Brinkema.

This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorney Uzo Asonye is prosecuting the case.

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Allison Tussey

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