Two Fiji nationals living in Modesto were sentenced to prison for leading a multi-million dollar mortgage fraud scheme.
The big picture: Jyoteshna Karan, 52, was sentenced to three years and four months in prison, while Praveen Singh, 45, will spend two years behind bars.
Driving the news: From 2006 to 2015, Karan and Singh made straw purchases and short sales of around 15 homes from Modesto to Sacramento.
- A straw purchase is when someone buys a home on behalf of another person to skirt certain restrictions and are generally illegal.
- A short sale is when someone sells a home for less than the amount owed on the mortgage, with lender approval, to avoid foreclosure.
- Once Karan and Singh acquired the homes, they allowed them to go into foreclosure and arranged for short sales with lenders.
- They then quickly flipped the homes to other people at market rates to reap significant profits, causing lenders to suffer over $3 million in losses.
Go deeper: Court documents state that Karan and Singh were experienced real estate professionals who used unwitting participants, fabricated documents and shell companies to carry out their fraud scheme.
- They used Singh’s mother as one of the straw purchasers and fabricated documents to make it appear as though the straw purchasers worked for their shell companies making six figure salaries.
- They also fabricated documents to make it appear as though the transactions were arm’s length to convince the lenders to go through with the deals.
