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Two Men Indicted in San Francisco for $19.8 million mortgage fraud

Christine Nyholm's picture

Two men were indicted on charges related to a $19.6 million mortgage fraud scheme on February 11, 2010. A federal grand jury in San Francisco indicted Michael Ohayon and David Papera with conspiracy to commit bank fraud, bank fraud, and money laundering, according to an announcement by United States Attorney Joseph P. Russoniello in a Federal Bureau of Investigation (FBI) press release.

According to the indictment, Ohayon, 41, and Papera, 47, allegedly recruited thirteen straw buyers. The Straw buyers had good credit scores, which were used to obtain over $19.6 million in fraudulent residential mortgage loans from Washington Mutual Bank. According to the information from the FBI, the defendants had with no intention of making down payments or mortgage payments on the properties.

The indictment further alleges that that Ohayon, with Papera’s knowledge, made misstatements to the straw buyers that an entity controlled by Ohayon and Papera would use the loan proceeds to make the down payments and mortgage payments. Loan applications to Washington Mutual Band contained numerous misstatements made made by Ohayon and Papera about the the straw buyers’ income and assets.

Straw buyers are often part of mortgage fraud rings. The straw buyers allow to use their names and personal details with the purpose of obtaining mortgage loans, although they have no intention of living in the home. The straw buyer is sometimes paid a fee for the use of their names, but sometimes they have no idea that their identities are being used for fraudulent activity.

Ohayon and Papera are currently out of custody. The men scheduled to make their initial appearances on the indictment at 9:30 a.m. on February 16, 2010 and February 22, 2010 respectively, before the Honorable Maria-Elena James.

Tracie L. Brown is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of a three-year investigation by IRS-CI and the Federal Bureau of Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Messrs. Ohayon and Papera must be presumed innocent unless and until proven guilty.

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