San Francisco Man Sentenced To 78 Months In Prison For Orchestrating Multimillion Dollar Fraud Scheme
SAN FRANCISCO - Maher Muhawieh was sentenced yesterday to six and one-half years in prison after he admitted running an investment fraud scheme in which he defrauded family members, friends, and many other victims out of millions of dollars, United States Attorney Melinda Haag announced.
On October 5, 2011, Muhawieh pleaded guilty to one count of wire fraud. According to the plea agreement, Muhawieh admitted to defrauding investors over a three-year period by falsely telling them their investments would be used to purchase and to renovate residential properties in San Francisco, resulting in substantial profits to investors when the properties were resold. Muhawieh admitted, however, that contrary to his statements to investors, he used investors’ money to pay interest to previous investors and for personal expenses, hallmarks of a Ponzi scheme.
Muhawieh admitted that he also defrauded investors by falsely telling them that their investments were secured by deeds of trust recorded in investors’ favor on the specific investment properties. In fact, Muhawieh concealed that such deeds were essentially worthless, because Muhawieh did not record deeds of trust at all on some properties and, with respect to other properties, he provided multiple investors with deeds of trust to the same property, thus providing little or no security for their investments. From 2006 to 2009, Muhawieh received more than $28 million from individuals, used more than $16 million of that to pay off earlier investors, and, according to the government, caused losses of approximately $12 million.
Muhawieh, 32, of San Francisco, was indicted by a federal grand jury on Sept. 16, 2010. He was charged with twelve counts of wire fraud, in violation of Title 18, United States Code, Section 1343. He has been in custody since Sept. 29, 2010.
The sentence was handed down by U.S. District Court Judge Charles R. Breyer following the defendant’s guilty plea to one count of wire fraud. Judge Breyer also sentenced the defendant to a three-year period of supervised release.
Doug Sprague is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of a one-year investigation by the Federal Bureau of Investigation.