Manassas Woman Sentenced to 12 Years in Prison for Mortgage Elimination Scheme
ALEXANDRIA, Va. – Linda Sadr, 52, of Manassas, Va., was sentenced today to 144 months in prison, followed by three years of supervised release, for her role in a “mortgage elimination” scheme that caused more than $11 million in losses. Sadr was also ordered to pay more than $9 million in restitution to the victims.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District Judge Liam O’Grady.
“Linda Sadr, with guile and greed, stole millions from her clients by promising to eliminate their mortgages,” said U.S. Attorney MacBride. “After paying off a few mortgages, she convinced hundreds of victims to use a program that only put them in more debt and caused many to lose their most precious material possession, their homes. Especially in the challenging housing market we have today, home owners need to be extremely vigilant about not succumbing to promises that they know are too good to be true.”
“During these tough economic times, manipulative people like Ms. Sadr have taken hard-earned money out of the hands of good and honest people,” said FBI ADIC McJunkin. “She took advantage of investors and homeowners, bilking them out of millions of dollars through her complex fraud scheme. The FBI will remain vigilant, investigating illegal financial transactions to identify those involved and holding them accountable for their unscrupulous actions.”
Sadr was indicted by a federal grand jury on Nov. 23, 2010, on two counts of mail fraud, four counts of wire fraud and two counts of money laundering. Sadr pled guilty to all eight counts of the indictment on Jan. 6, 2011.
According to court documents, from 2004 through 2008, Sadr marketed a scheme known as a “Mortgage Elimination Program.” Sadr represented to the homeowners that lenders making refinance loans were operating illegally by, among other things, bundling the loans for resale and selling them to investment banks, which then used the loans as collateral to borrow additional funds. Sadr fraudulently represented to homeowners that she and her companies could arrange for the satisfaction of the homeowners’ mortgages on their residences. Sadr represented that she would challenge the lenders, on behalf of the homeowners, for their purported illegal actions, would prevail in the challenges, and would thereby eliminate the mortgages.
In general, those homeowner clients with sufficient equity in their homes who participated in the Mortgage Elimination Program were required to refinance their mortgages with maximum cash-out refinance loans. Subsequent to settlement, individual homeowner clients were required to pay 10 to 15 percent of the proceeds of the cash-out refinance loan as a fee to Sadr or to one of the entities she controlled. Clients were also required to give Sadr the equivalent of 12 to 18 months of advance mortgage payments to be held in “escrow,” an amount that Sadr claimed she would use to pay the refinanced mortgages for the homeowner clients until their mortgages were eliminated.
In addition to participation in the Mortgage Elimination Program, Sadr offered some clients the option of investing equity from their refinance or other monies in exchange for a guaranteed rate of return of 12 to 18 percent. Sadr guaranteed that the principal on those investments would be refunded at the end of the investment period.
Sadr recruited her mortgage elimination services to new clients via word of mouth through satisfied past homeowner clients, who thought their mortgages had been eliminated through monetary settlements received from Mortgage Elimination Program challenges. In reality, the mortgages were eliminated because Sadr repaid the refinance lenders in full. In so doing, Sadr used the monies she obtained from other unsuspecting homeowner clients without their knowledge or consent.
None of the more than 150 participants in the program received reconveyances on their homes and none received refunds from Sadr for the fees that were paid to her. The known homeowner client victim loss from Sadr’s mortgage elimination scheme and related high-yield investment scheme exceeds $11 million.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorneys Marla Tusk and Jack Hanly are prosecuting the case on behalf of the United States.A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on https://pcl.uscourts.gov.