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Grand Jury Returns Indictment Charging Fraud, Money Laundering In Purchase Of Park City Property

February 15, 2012

SALT LAKE CITY – A federal grand jury returned a three-count indictment Wednesday afternoon charging Gabriel S. Joseph, age 34, of Fremont, Calif., with wire fraud and money laundering in connection with an alleged scheme to get a real estate loan and line of credit from a lender.

According to the indictment, Joseph created Annuit Coeptis, LLC, about March 10, 2004, to “perform any and all lawful acts including but not limited to the purchase, holding, management of, and sale of real estate.” About March 22, 2006, Joseph facilitated the creation of a company, SCIPC, LLC, which was run at his direction. Through SCIPC, the indictment alleges, Joseph disguised and hid his involvement in the purchase and sale of a property in Park City, using fraudulent representations and promises and omitting material facts.

The indictment alleges Joseph purchased property through SCIPC and sold the property to himself, unbeknownst to the lender, at a grossly inflated false price in order to fraudulently obtain almost $2 million in loan proceeds. The indictment alleges Joseph accomplished this by lying about his assets and liabilities in his loan applications and transferring loan proceeds through SCIPC.

According to the indictment, Joseph caused SCIPC to enter into a real estate purchase contact for the Park City property about Sept. 11, 2006, for $3,395,000. Around September 2006 through October 2006, Joseph obtained a loan for approximately $3,407,303.52 from a hard money lender in order for SCIPC to purchase the property. The settlement was executed about Oct. 6, 2006, for approximately $3.4 million. Joseph, according to the indictment, concealed the sales price and demanded that parties not disclose the information to anyone outside the transaction.

Less than two weeks after SCIPC purchased the property for approximately $3.4 million, Joseph entered into a real estate purchase contract with SCIPC to purchase the property for $7 million. The indictment alleges Joseph provided false and misleading information to a mortgage broker in Newport Beach, Calif., for a loan and line of credit on the property. The false and misleading information included statements about income, assets, the fair market value of the property, employment and employment income, and whether the defendant intended to occupy the property as his primary residence.

The mortgage broker used this misleading information in an application to Washington Mutual for a mortgage of $4.9 million and a line of credit for approximately $700,000 on the property. The false information provided by Joseph, the indictment alleges, allowed the defendant to obtain a more favorable interest rate and a substantially lower loan-to-value ratio on the property. The indictment alleges Joseph failed to disclose to the broker that a company he secretly controlled had just purchased the property a month or so earlier for $3.4 million – less than half of what the defendant was now claiming the property was worth. At the closing on the property, the indictment alleges, Joseph concocted a fake “seller carry” loan to create the illusion that he was receiving financing from other sources other than Washington Mutual.

The potential maximum penalty for each count of wire fraud and money laundering in the indictment is 10 years in prison and fines of $250,000 per count. Joseph will be issued a summons to appear for an arraignment on the charges.

Indictments are not findings of guilt. Defendants charged in indictments are presumed innocent unless or until proven guilty in court.

The case is being investigated by special agents of the FBI and IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys in Salt Lake City.

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