Kalil Khalil, 36, plead guilty in U.S. District Court in Michigan and admitted that during a 24-month period beginning in January 2001, he prepared fraudulent loan applications and related documents that were submitted to mortgage lenders.
Each of the loan packages submitted to a mortgage lender was fraudulent in one or more of the following ways: the purpose of the loan was not to buy or refinance a residence; the borrower described on the application was not the true borrower; the description of the borrower’s employment was false; documents purporting to substantiate the borrower’s employment (W-2 Forms, check stubs) were bogus; the appraisal was inflated and forged; title to the property was not free and clear, and the title company purporting to guarantee clear title (Taylor Title, Downriver Title, or Tri-County Title) was merely a name used by Khalil and an associate, Tariq Hamad, to carry out the scheme; and photographs were included that depicted a property other than the property identified in the loan application.
Many of the fraudulent loan packages were approved and the loan proceeds were wired from the mortgage lenders, which were located outside of the State of Michigan, to bank accounts controlled by Khalil and Hamad that were located in metropolitan Detroit, Michigan in the names of the straw title companies. Khalil and Hamad used most of the fraud proceeds to buy and sell stocks as daytraders.
Michigan United States Attorney Stephen J. Murphy, III, said, “This type of outrageous fabrication of basic loan documents caused over $ 20 million in losses. Mortgage fraud costs lenders millions and undermines the credibility of the entire market, hurting especially first-time entrants into the market who will find it much harder to get loans to support their aspirations for home ownership. The FBI deserves kudos for pursuing this kind of significant fraud.”
Under his plea agreement with the government, Khalil faces up to 108 months’ imprisonment and $250,000 in fines and could be ordered to pay $12.7 million in restitution to the lenders. He also agreed to forfeit his interests in several bank and securities accounts. Khalil is scheduled to be sentenced by on August 20, 2007.
Tariq Hamad pleaded guilty to the same wire fraud scheme on December 19, 2006. Under his plea agreement with the government, Hamad faces up to 135 months’ imprisonment and $250,000 in fines and could be ordered to pay $15.5 million in restitution to the lenders. He also agreed to forfeit his interests in seven bank and securities accounts. Hamad is scheduled to be sentenced on May 15, 2007.
The total loss to the mortgage lenders resulting from Khalil‘s and Hamad‘s criminal conduct is $21.7 million.