A Guyanese man who was the President of a Queens, New York firm fingered in a US$23 million loan fraud recently handed himself over to federal authorities and is expected to appear in court shortly.
According to New York press reports, David Ramnauth was the President and owner of GuyAmerican Funding Corp, a mortgage brokerage firm located on Liberty Avenue, Jamaica, Queens, New York through which he and others allegedly facilitated a massive mortgage fraud scheme. Media reports stated that Ramnauth handed himself over to authorities on December 10 and is expected to appear in court before the week is out.
Ramnauth, 54, of Levittown, New York, is charged with conspiracy to commit bank fraud and wire fraud and if convicted, he faces a maximum sentence of 30 years in prison.
Three other persons Peggy Persaud and Ravi Persaud, both with Guyanese connections, and Glen Head were charged in October with fraudulently obtaining US$23M in loans involving 44 properties. They were granted bail and are under house arrest.
Another three, Elton Lord, Rafick Baksh and Mahamood Hussain who worked with GuyAmerican loan officers to recruit homeowners in financial distress who were willing to sell their homes were also charged.
According to the indictment against the defendants, they used “straw buyers”—persons who posed as home buyers in exchange for a fee, but who had no intention to live in the mortgaged properties to perpetrate their scheme. The defendants arranged home sales between these distressed sellers and these straw buyers, and obtained mortgages using fraudulent representation, including about the supposed purchasers’ net worth, employment, and income. The defendants re-sold, or flipped, properties multiple times between different straw buyers, stripping the equity from those properties as they were resold with inflated market values. For example, a property, purchased by a straw buyer in December 2006 in Queens, New York, for US$355,000 was resold to another straw buyer in April 2007—only four months later—for US$680,000, with the profit going to the defendants and their co-conspirators. In addition, the defendants often arranged for a single straw buyer to purchase multiple properties within days or weeks of each other, without disclosing the prior purchases on the subsequent loan applications.
The loan applications submitted to the lenders contained numerous false statements about the straw buyers, who often had little or no assets and modest or no incomes. The loan applications therefore contained false statements about the supposed borrowers’ employment, income, assets, and existing debt. In addition, the loan applications falsely represented that the straw buyers intended to reside in the properties, when in fact they did not. It was stated that after becoming aware that fraudulent loans were being submitted under the GuyAmerican licence, Ramnauth allegedly directed through a loan officer at GuyAmerican that the closing attorneys set aside six months’ worth of mortgage payments from the closing proceeds, so that the lenders would not discover the scheme. He was also aware that three of his employees were engaging in equity stripping in the sham real estate transactions, but permitted them to originate additional fraudulent loans under the GuyAmerican licence, and continued to make commission payments to loan officers in connection with the fraudulent loans. The US authorities have charged 41 lenders, lawyers and others in the real estate industry, including some with Guyanese roots, with participating in mortgage fraud schemes that preyed on New York homeowners facing foreclosure. The breaking of this case in October was part of a wider investigation and federal prosecutors had announced charges against the 41, who they had said used fraud to obtain more than US$64 million in loans connected to more than 100 residential properties in New York State. News reports at that time had said that the FBI, the Secret Service, the New York State Banking Department and other agencies were involved in the investigations that led to the wire fraud, bank fraud and conspiracy charges against the lawyers, mortgage brokers and loan officers, who engaged in complex plots that operated over a period of years. The investigation, called Operation Bad Deeds, uncovered eight separate cases in which people were accused of obtaining loans through fraudulent means by falsifying mortgage applications, flipping properties and stripping equity from properties. The targets of the fraud included desperate homeowners who were having difficulty making mortgage payments or facing foreclosure.
