Monday, November 24, 2008

Fairfax man pleads guilty in $33 million mortgage fraud case - - 19 Nov 2008

The multimillion-dollar Fairfax home of a Bollywood film producer who pleaded guilty last week to money laundering will be auctioned off to the highest bidder on Nov. 20.

Vijay K. Taneja, 47, is charged with causing an accumulated loss of at least $33 million to four financial institutions by the time his mortgage company, Financial Mortgage Inc., filed for bankruptcy in June 2008.

In addition, many who considered Taneja a friend lost money through their association with him and could potentially lose their homes to foreclosure.
Taneja was a big shot in the close-knit Indian community of the Washington metropolitan area, and was considered a producer of Bollywood Indian films, according to Anuj Sud, an attorney with McNamee & Hosea in Greenbelt, Md.

Sud, who is not involved in the litigation, has four relatives who trusted Taneja to handle their mortgage loans. None of them knew that anything was wrong until they received notices in the mail, claiming that their loans were in default.

According to U.S. District Court documents in support of the guilty plea, Taneja laundered loan money through a mortgage fraud scheme involving his company, FMI, which originated and sold mortgages on residential properties.

Before FMI sold its mortgages to financial institutions as long-term investors, FMI used another group of financial institutions (referred to as “warehouse lenders”) to temporarily fund the mortgages before they were sold.

Beginning in 2001, FMI began defrauding a series of warehouse lenders and eventually two other financial institutions serving as long-term investors.

"We call it an 'air loan scheme,'" said FBI agent Adam Lee of the bureau's Washington field office.

"It involves leveraging a property way above its value through financing and layering loan on top of loan on a single property without one lender knowing that another lender already has leverage against it. The intent is to let the properties go into foreclosure and then walk away from it."

Lee said that Northern Virginia is a hot spot for foreclosures and that is a trigger for potential mortgage fraud cases.

"Mortgage fraud is one of the Washington field's highest priorities," he said.

As for Taneja's own 25,000-square-foot house at 5335 Summit Drive in Fairfax, Lee said its opulence caught the bureau's attention.

"It is a very conspicuous house for Northern Virginia," he said. "There was certainly some flamboyance in [his] standard of living and it certainly got our attention."

Fairfax County tax records list the tax value of the home at just over $3 million, but the eight-bedroom, nine-full-bath, four-half-bath home with pool, ballroom, indoor racquetball court and movie theater is "very undervalued," according to Jeff Stein, who is in charge of auctioning the home. The handful of potential buyers are required to put down a $100,000 deposit before being allowed to bid at the auction, set to begin at 11 a.m.

As for Taneja, he could be moving to a much larger, if less private, place of residence. He will be sentenced on Jan. 30, and potentially faces 20 years of incarceration.

By Gregg MacDonald

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