A former mortgage originator and closing agent were among those indicted in "straw buyer" case.
It's déjà vu all over again for the Wazwaz family, a clan of Palestinians who drew front page attention in 2007 when more than a dozen of them were indicted in a conspiracy to evade taxes on the sale of cigarettes at their tobacco stores in Minnesota. Three of the defendants in that case remain fugitives, but the rest received sentences ranging from probation to 42 months in prison.
Now come Taleb Wazwaz, just a year out of prison from the cigarette case, and Fawaz "Mike" Wazwaz, in an alleged mortgage fraud conspiracy that the government says ran from 2004 until 2006.
Without naming names, the government says the men recruited "straw buyers" in an elaborate scheme to bilk lenders by taking out inflated mortgages on properties and then letting them go into default. At least some of those buyers include more Wazwazes, according to records filed in federal court in 2006.
That's when the government first charged Fawaz Wazwaz in a criminal complaint. He has remained at large, so the complaint sat in limbo until Monday, when a federal grand jury handed up a formal indictment on conspiracy and mortgage fraud charges before the statute of limitations expires, which would have precluded the prosecution.
David Moldal, a special agent with the FBI, laid out the alleged fraud in a 12-page affidavit in 2006. Moldal described a series of transactions involving several family members that he said were designed to get Commonsense Mortgage of Shoreview -- where Fawaz Wazwaz had worked as a loan officer -- to broker a $405,000 mortgage for a cousin so he could buy a house on Benjamin Street in Fridley.
David Hughes, an unindicted "colluding real estate appraiser," had prepared dozens of inflated appraisals for Fawaz Wazwaz, including one for the Benjamin Street property, Moldal said. The indictment issued this week lists that property and 18 others as the foundation of a broad conspiracy charge.
According to the grand jury, Fawaz Wazwaz, 33, brokered mortgage loans by finding borrowers, preparing loan applications and submitting them to various lenders. His wife and Taleb Wazwaz were among the buyers. But the loan documents contained inflated appraisals, falsified financial information and other misrepresentations, the government says.
Genevieve Marie McCullough, a real estate closer at two Twin Cities title companies, conspired with Fawaz Wazwaz and submitted falsified closing documents to lenders, who lost more than $2.5 million as a result of the fraud, the indictment says.
The conspiracy count carries a maximum penalty of five years in prison; each of the seven mortgage fraud counts carries a maximum of 20 years.
In a separate but related case, Taleb Wazwaz, 43, pleaded guilty May 4 to a charge of wire fraud conspiracy for his role as a straw buyer on seven Minneapolis residences and one in St. Paul at a total cost of $1.14 million. He collected nearly $750,000 more than the properties were worth and after making a few mortgage payments, let each of the loans go into default, the government says.
Dan Browning • 612-673-4493