Businessman Indicted for Submitting False Loan Applications

Allison Tussey —  September 19, 2014 — 2 Comments

Selim Zherka, 46, Somers, New York, was indicted by a federal grand jury in White Plains for submitting multiple false loan applications to banks, tax fraud, wire fraud, and witness tampering. Zherka allegedly obtained over $146 million in loans from three banks for the purchase and/or refinancing of apartment house complexes by lying about the purchase prices, the down payments, his assets, income, and tax returns.

Zherka was arrested by agents of the FBI and is expected to be arraigned in federal court in White Plains.

According to the Indictment, from November 2005 through 2008, Zherka obtained a total of over $146 million in loans from three banks—North Fork Bank (now Capital One), Sovereign Bank (now Santander), and Signature Bank—for the purchase and/or refinancing of apartment house complexes in New England, Tennessee, New Jersey, and New York by lying about the purchase prices of the real estate he was acquiring, the amount of the down payments he was making toward the purchases in question, his assets, his income, his tax returns, and the nature and circumstances of a 2000 court judgment against him for assault and breach of contract (which, to date, he has not paid).

Additionally, the Indictment charges Zherka with engaging in a decade-long tax fraud scheme. The Indictment alleges that Zherka repeatedly submitted fraudulent tax returns to the IRS that overstated depreciation expenses and understated his capital gains on tax returns for the real estate holding companies in which he was a partner and which, in turn, owned the above apartment house complexes, thereby reducing their tax liabilities. The Indictment also charges that Zherka obstructed the Internal Revenue Service by, among other means, failing to file personal tax returns for over a decade.

The Indictment also charges that Zherka schemed to defraud the judgment creditor in connection with the above-referenced 2000 case of that individual’s right to receive payment of the judgment. Zherka had been found liable by a New York State Supreme Court jury in Manhattan for assaulting that individual and for breaching a contract with him.

Finally, the Indictment charges Zherka with tampering with witnesses in this investigation.

If convicted on the charges in the Indictment, Zherka faces the following maximum penalties: for each of the 11 counts of submitting a false loan application with which he is charged, 30 years in prison and a $1 million fine or twice the gross gain or loss resulting from the crime; for the count of wire fraud and the count of witness tampering, 20 years in prison and a $250,000 fine or twice the gross gain or loss resulting from the crime on each count; for the count of conspiracy to obstruct the IRS and violate tax laws, five years in prison and a $250,000 fine or twice the gain or loss resulting from the crime; and for each of the 10 counts of making/subscribing to false returns, the 10 counts of aiding/assisting in the preparation of false tax returns, and the count of attempting to interfere with the administration Internal Revenue laws, three years in prison and a $250,000 fine or twice the gross gain or loss resulting from the crime. Additionally, he faces potential criminal forfeitures totaling $146 million, restitution, and the costs of prosecution. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant and any forfeiture would be determined by the Court.

Preet Bharara, the United States Attorney for the Southern District of New York, Shantelle P. Kitchen, the Acting Internal Revenue Service Special Agent in Charge of the New York Office—Criminal Investigation (“IRS”), George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Christy Romero, the Special Inspector General of the Troubled Asset Relief Program (“SIGTARP”), announced the indictment.

Mr. Bharara praised the work of the IRS, the FBI, and the Special Inspector General for the Troubled Asset Relief Program in this investigation.

This case is being handled out of the White Plains Division. Assistant United States Attorneys Elliott B. Jacobson and Perry A. Carbone are in charge of the prosecution.

U.S. Attorney Bharara stated: “Selim Zherka, while running his various businesses, allegedly engaged in a string of crimes. Zherka, the owner of commercial real estate and other businesses, stands accused of filing multiple false bank loan applications, engaging in tax fraud, and witness tampering. He is also charged with defrauding a businessman of his right to collect a court judgment against Zherka for assault and breach of contract.”

Acting IRS Special Agent in Charge Kitchen stated: “The Internal Revenue Service is committed to ensuring that everyone pays their fair share of taxes. The public should not have to pick up the tab for those who willfully choose to not file correct and accurate returns. IRS-Criminal Investigation investigates individuals who allegedly corruptly violate the tax laws to further their business and personal interests, at the expense of other businesses and individual taxpayers who play by the rules.”

Assistant FBI Director Venizelos stated: “As alleged, Zherka’s entrepreneurship got a little too creative when he began fabricating loan applications, among many other things, and Zherka’s web of deception knew few bounds. Today he finds himself under arrest and on the wrong side of the law.”

Special Inspector General of TARP Christy Romero stated: “Following an extensive criminal investigation by SIGTARP and our law enforcement partners, this morning federal agents apprehended Selim Zherka without incident in Westchester County, New York. Zherka is charged with falsifying information on commercial loan applications submitted to North Fork Bank—later purchased by TARP recipient Capital One—to obtain more than $36.5 million in loans from the bank.”

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Allison Tussey

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2 responses to Businessman Indicted for Submitting False Loan Applications

  1. Ain’t that the truth

  2. I’d like to hear his defense. “The bank accepted the applications”. North Fork bank and Capitol one should be named as co-conspirators.

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