Man Jailed for Defrauding HELOC Holder into Settling $344,000 Balance for $45,000

Allison Tussey —  March 17, 2014 — 3 Comments

Saleem M. Khan, 49, Dublin, California, was sentenced to twenty one months in prison and ordered to pay a $60,000 fine for bank fraud and making false statements to a financial institution.

Khan pleaded guilty on July 25, 2013, to submitting false documents to a financial institution in order to obtain a settlement of his home equity line of credit. Specifically, Khan admitted that he took out a $344,000 HELOC on his home in approximately September 2005. That HELOC was owned by E-Trade Bank, which retained PNC Bank to service the loan.

By 2010, Khan had stopped making payments on the HELOC. In January 2011, he provided a so-called “hardship package” to PNC Bank to demonstrate his inability to pay the loan. That hardship package contained false statements regarding Khan’s employment history, income, and assets, and included a forged pay stub that underreported his monthly income by approximately $2000. Moreover, Khan failed to disclose to PNC Bank the significant stock options trading gains of approximately $800,000 that that he had made in the previous year. Based on Khan’s misrepresentations, PNC Bank and E-Trade Bank ultimately agreed to settle the outstanding $344,000 HELOC balance for only $45,000, and thereafter the banks took action to re-convey to Khan the lien that they held on Khan’s property.

Khan was indicted by a federal grand jury on December 6, 2012. He was charged with one count of bank fraud and one count of making false statements to a financial institution.

The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Court Judge, following a guilty plea on one count in violation of Title 18, United States Code, Section 1344, and one count in violation of Title 18, United States Code, Section 1014. Judge Gonzalez Rogers also sentenced the defendant to a three-year period of supervised release and a $60,000 fine. The Court set a further hearing for May 29, 2014, for determination of a restitution amount to be paid to the bank victim in this case. The defendant will begin serving the sentence on June 23, 2014.

United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson announced the sentence.

Kyle F. Waldinger is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of an investigation by the FBI.

 

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Allison Tussey

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3 responses to Man Jailed for Defrauding HELOC Holder into Settling $344,000 Balance for $45,000

  1. First off, this comes with the attitude that my house isn’t worth as much, why should I pay that much for it. While there were inflated prices, it is like the stock market, property values change, up and down. It is what it is. I bought in Florida during the UP times.. I have a second that has no equity backing. But, I agreed to the price and the liens, I am responsible. I also work in mortgage banking, Underwriter, and jobs are up and down as well. I have maintained my mortgages, but took a hit on credit cards, in 2008, living with that. I did pay off as many as I could.

    The point is in this case, whether it is borrower/citizen beware, when you are being judged on a hardship case, income, assets are taken into account. Not disclosing or altering documentation is fraud. It is a no brainer, and I don’t feel sorry for this guy. The problem was “everyone” was doing it, which is a breakdown of our cultures morals and ethics.

  2. Highlights the dangers of interacting with financial institutions. If they suspect even the slightest chance of fraud they are required to anonymously report a SAR to fincen.gov which will surely invoke an investigation. As with most legal matters, it is best to keep ones mouth shut. Would have been better for the borrower to just walk from the property and let the lender foreclose then to lie to a financial institution. I would also argue that most loan modification/short sale packages contain such misreps as no one is telling the “dumb” consumer about the risks of their lie.

  3. Jared B. Wilbur March 18, 2014 at 1:18 pm

    This story highlights the often underreported fraud in the short sale/loss mitigation space. If your loss mitigation staff aren’t trained to properly review income tax returns and pick up on red flags for potential fraud, you could be losing substantial money with each transaction.

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