Justice Department Recognizes Human Trafficking Survivor and Advocate from Washington with Special Courage Award
A former hard money lender who resides in University Place, Washington was sentenced today in U.S. District Court in Tacoma to five years in prison, three years of supervised release and $831,607 in restitution for his mortgage fraud scheme announced Acting U.S. Attorney Annette L. Hayes. EMIEL A. KANDI, 37, pleaded guilty in April 2014 to Conspiracy to Submit False Statements in Loan Applications and to Make False Statements to the Department of Housing and Urban Development, and Submitting False Statements in Loan Applications. The mortgage fraud scheme caused a loss of more than $800,000 to the U.S. Department of Housing and Urban Development and defrauded mortgage applicants as well. At sentencing U.S. District Judge Ronald B. Leighton said KANDI “was a predator. He took advantage of situations. He found a method to secure funds… He was aggressive, he was pushing the envelope, he was a risk-taker without humility and without empathy – those characteristics are ruinous.”
“This defendant lined his pockets at the expense of taxpayers and his own clients,” said Acting U.S. Attorney Annette L. Hayes. “His scheme diverted funds that had been set aside to help people achieve the dream of homeownership. Kandi also hid as much as $35,000 in fraudulent charges in loan documents – money he siphoned directly into his bank accounts. As the recent housing crisis demonstrated, mortgage fraud can have a devastating impact on homeowners and on the economy.”
“Whether fueled by greed or hubris, Emiel Kandi thought he could get away with exploiting members of our community and the federal government,” said Assistant Special Agent in Charge Carlos L. Mojica of the FBI’s Seattle field office. “He boasted about being a wolf that preyed on the weak, but today he learned that criminal activity is not a badge of honor but a disgrace. The FBI and its partners in the Puget Sound Mortgage Fraud Working Group are committed to holding people like Kandi accountable for their fraudulent schemes.”
According to records in the case, between 2008 and 2009, KANDI submitted false information to obtain home mortgage loans. Some of these fraudulent home mortgage loans were designed to let KANDI cash out of properties that KANDI owned through his hard money lending. KANDI’s lending activities were typically secured by a borrower’s home and charged a high rate of interest. The hard money loans were structured, in some instances, to allow KANDI to seize control of a home if the borrower missed a single payment. Other fraudulent home mortgage loans included an inflated and often disguised commission payment to KANDI. In at least 19 loans, KANDI and his co-schemers submitted false information regarding the borrowers’ employment, salary, and intention to live in the home. Some of the loan paperwork included inflated appraisals so that KANDI could maximize the money he obtained in the scheme. The false statements were designed to make the loans appear legitimate and ensure that they would meet federal lending standards. Many of the loans were processed by Pierce Commercial Bank and were insured by the Federal Housing Administration (FHA), a unit within the federal Department of Housing and Urban Development (HUD).
“As a result of his conduct the legislature changed the law to protect consumers who secure loans with their primary residence, even when they are characterized as a business loan,” Deborah Bortner, Director of Consumer Services at the Washington State Department of Financial Institutions (DFI) said. “Emiel Kandi was particularly predatory to some of our most vulnerable citizens.”
“In the last number of years, we have seen enormous and damaging developments in the mortgage and housing markets. Convictions such as this set an important precedent that submitting false statements and fraudulent behavior will not be tolerated and will be aggressively pursued. The United States Department of Housing and Urban Development, Office of Inspector General is deeply committed to working in partnership with other federal, state and local authorities to ensure that corrupt individuals do not use their positions to enrich themselves at the expense of the HUD and its federally-insured mortgage loan program,” said David R. Barnes, Special Agent in Charge.
False statements were made in loan applications for various properties in Western Washington, including properties in Pierce, King, and Clark County. Under the terms of the plea agreement, KANDI agreed to make restitution of $831,607 due to HUD.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being investigated by the Puget Sound Mortgage Fraud Working Group, whose members include the FBI, the Department of Housing and Urban Development – Office of Inspector General, the Washington Department of Financial Institutions (DFI), and the Washington State Department of Licensing. The case is being prosecuted by Assistant United States Attorney Brian Werner and Special Assistant United States Attorney Hugo Torres. Mr. Torres is a King County Deputy Prosecutor specially funded by the Washington Department of Financial Institutions (DFI) to handle mortgage fraud cases in state and federal court.