As previously reported by Mortgage Fraud Blog, on October 5, 2011, Muhawieh pleaded guilty to one count of wire fraud. According to the plea agreement, Muhawieh admitted to defrauding investors over a three-year period by falsely telling them their investments would be used to purchase and to renovate residential properties in San Francisco, California, resulting in substantial profits to investors when the properties were resold. Muhawieh admitted, however, that contrary to his statements to investors, he used investors' money to pay interest to previous investors and for personal expenses, hallmarks of a Ponzi scheme.
Muhawieh admitted that he also defrauded investors by falsely telling them that their investments were secured by deeds of trust recorded in investors' favor on the specific investment properties. In fact, Muhawieh concealed that such deeds were essentially worthless, because Muhawieh did not record deeds of trust at all on some properties and, with respect to other properties, he provided multiple investors with deeds of trust to the same property, thus providing little or no security for their investments. From 2006 to 2009, Muhawieh received more than $28 million from individuals, used more than $16 million of that to pay off earlier investors, and, according to the government, caused losses of approximately $12 million.
Muhawieh was indicted by a federal grand jury on Sept. 16, 2010. He was charged with twelve counts of wire fraud, in violation of Title 18, United States Code, Section 1343. He has been in custody since Sept. 29, 2010.
The sentence was handed down by U.S. District Court Judge Charles R. Breyer following the defendant's guilty plea to one count of wire fraud. Judge Breyer also sentenced the defendant to a three-year period of supervised release.
United States Attorney Melinda Haag announced the sentence.
Doug Sprague is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of a one-year investigation by the Federal Bureau of Investigation.
This prosecution is part of efforts underway by President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
source: Mortgage Fraud Blog