Real Estate Brokers Imprisoned for Scheme to “Wash” Title to Million-Dollar San Diego Homes
Assistant U.S. Attorney Emily W. Allen (619) 546-9738
NEWS RELEASE SUMMARY – March 21, 2016
SAN DIEGO – Brothers and former San Diego real estate brokers Adel Afkarian and Atef Afkarian were sentenced today to prison for their role in a fraudulent “debt elimination” scheme that purported to eliminate the mortgages on several million-dollar homes in San Diego.
U.S. District Judge John A. Houston sentenced Adel Afkarian to serve 18 months in custody and Atef Afkarian to serve 13 months. In addition to the time in custody, the brothers were both ordered to pay more than $5.5 million in restitution to the victims of the scheme.
To implement the scheme, the Afkarians identified underwater homeowners—including themselves—and began a process to make it appear as though the homeowners’ debts had been satisfied. To do so, they recorded fraudulent deeds that purported to extinguish the large mortgage loans encumbering each property. They then sold the properties to innocent purchasers, deceiving the buyers into paying the full purchase price to the Afkarians or their co-conspirators. The mortgage lenders, unaware of the fraudulent documents recorded on title or unable to prevent the sale in time, were left unpaid.
With regard to their own underwater home, the Afkarians pretended that $1.4 million in mortgage debt had vanished. They used the “debt elimination” method to successfully arrange the fraudulent sale of a total of four properties in and around San Diego, generating more than $4.3 million in proceeds which went directly into bank accounts owned by the brothers and their co-conspirators. In some cases, they sold this fraudulent “debt elimination” program to existing clients of their mortgage business.
In addition to the “debt elimination” scheme, Adel and Atef Afkarian also conspired to arrange fraudulent short sales for underwater clients through a simultaneous “double escrow” scheme. Rather than selling an underwater home at a pre-approved short sale price, the defendants arranged two simultaneous sales of the same property at two different sale prices, using a straw buyer as the intermediary and purported seller in the second transaction. This way, the short sale lender would believe that the property was being sold for initial first-escrow price, rather than the higher second-escrow price (which was in fact the arms-length market sales prices). The defendants and their co-conspirators would then pocket the difference, diverting money from the lenders.
The Afkarians each pleaded guilty in September 2013, admitting their participation in these schemes. As part of their guilty pleas, they also agreed to forfeit a home on Santa Fe Canyon Place, which they had purchased using approximately $715,000 in proceeds of the fraud, and an additional $388,000 recovered from bank accounts where they had transferred proceeds.
One of the Afkarians’ clients, Mehran Abazary, was also charged in connection with this case, and pleaded guilty on December 15, 2015. Abazary admitted that he owed more than $2 million in mortgage debt when he hired the Afkarians and their co-conspirators to help him “eliminate” this debt and sell the property. When the sale closed, Abazary received $250,000 in proceeds of the sale. Abazary pleaded guilty to filing a false tax return omitting to disclose this income to the Internal Revenue Service. He is scheduled to be sentenced by Judge Houston on September 6, 2016, at 8:30 am.
DEFENDANTS & CHARGES
Adel Afkarian, 13CR1469-JAH (1) Age: 42 Carlsbad, California
Atef Afkarian, 13CR1469-JAH (2) Age: 40 Slidell, Louisiana
Conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. § 371
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, $100 special assessment, 3 years’ supervised release, restitution
ADDITIONAL DEFENDANT & CHARGES
Mehran Abazary, 15CR3073-JAH Age: 64 San Diego, CA
Subscribing to a false tax return, in violation of 26 U.S.C. § 7206(1)
Maximum Penalties: 3 years’ imprisonment, $250,000 fine, $100 special assessment, 1 year supervised release, restitution
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigation