Waxahachie man indicted in mortgage fraud scheme
By 03/15/2007 00:00:00
DALLAS - Foday S. Fofanah, 38, of Waxahachie, along with seven other defendants, has been indicted by a federal grand jury on various charges relating to a $14 million mortgage fraud scheme they operated in the Dallas area.
According to authorities, Fofanah recruited straw borrowers which are fake borrowers and was charged with two counts of wire fraud.
'The defendants ran a scheme to defraud mortgage lenders and financial institutions,' stated U.S. Attorney Richard Roper.
Seven of the defendants were arrested at various locations throughout the metroplex and in Hawaii and the other defendants surrendered to authorities last week and were set to appear in front of U.S. Magistrate Judge Paul Stickney on Friday, March 9.
In a statement released by the Department of Justice which outlined the scheme, they located single family residences in and around the Dallas area that were offered for sale, recruited straw borrowers to purchase the targeted single-family residences.
They also inflated the sales prices of the targeted residences to an amount greater than the fair market value of the residences and then submitted false and fraudulent loan applications in the name of the straw purchasers to mortgage loans in amounts substantially greater than the value of the properties. They allegedly obtained the inflated loans based on false and fraudulent misrepresentation about repairs to be made on the properties, paid the owners of the residences and then distributed the remaining proceeds among themselves without doing the repairs. The loans have since gone into default and the total amount of the fraud attributed to all the defendants, including Fofanah, was estimated to be approximately $14 million.
Experts said the indictments last week represent a major case in the mortgage industry.
With the housing boom as has been, mortgage fraud has become a concern and the FBI announced Thursday, March 8 it had joined with the Mortgage Bankers Association to combat mortgage fraud.