Golden Valley Man Gets 10 Years in House-Flipping Scam
Zack Zafer Dyab was sentenced after pleading guilty to federal charges of wire fraud and money laundering.
A Golden Valley man has been sentenced to 10 years in federal prison in connection with a house-flipping scheme in which lenders nationwide were defrauded of more than $2.5 million.
Zack Zafer Dyab, 47, pleaded guilty in late 2010 to one count of conspiracy to commit wire fraud and one count of money laundering in connection with the crime.
United States District Court Judge Joan N. Ericksen sentenced Dyab on Thursday in federal court, according to a news release from Jeanne F. Cooney, director of community relations for the U.S. Attorney’s Office of Minnesota. (See the PDF)
He was indicted on the charges with Julia Alexander Rozhansky, 47, of Minnetonka, who also pleaded guilty.
According to Cooney's news release:
In his plea agreement, Dyab admitted that from 2003 through early 2007, he conspired with Rozhansky and others to induce mortgage lenders across the country to loan substantial amounts of money to Rozhansky’s relatives. He also admitted pocketing large amounts of the mortgage loan proceeds for his personal use.
At the time, Dyab owned American Choice Lending Inc., and Rozhansky worked as his assistant, with supervisory authority over the company’s loan officers and processors.
As part of the fraud scheme, Dyab arranged for straw buyers to purchase properties at inflated prices, either from him or from companies he owned. In other cases, he had straw buyers buy properties at inflated prices from third-party sellers.
A straw buyer makes a purchase for another person.
After the sales, Dyab and Rozhansky took a portion of the sale proceeds from the sellers. In some cases, Dyab arranged for a real estate broker to receive so-called real estate commissions from the transactions, which the broker would then sign over to Dyab.
In each transaction, Dyab admitted to investigators that he submitted a mortgage loan application that greatly exaggerated the monthly income and bank balances of the phony buyers. He said he also sometimes deposited money into the bank account of one of the straw buyers to make it appear the buyer had substantial liquidity.
Dyab routinely provided straw buyers with money to bring along to closings, which were passed off as down payments. He also led lenders to believe that the straw buyers intended to live in the homes they were buying, when he knew they actually planned to sell the homes within a year to third-party straw buyers, who would then default on the mortgage loans.
At the conclusion of one of the real estate transactions, on Feb. 15, 2005, Dyab obtained $63,938 in seller proceeds by forging the seller’s name on the back of the check, then depositing it into his own bank account. Two days later, he used $15,000 of that money to buy a cashier’s check.