Santa Ana: Fraud, Fraud, Fraud

Who can buy a Santa Ana house for $249,500 and sell it 20 days later for $575,000?

Meet Vijay and Supriti Soni, a husband-wife money-making team of Corona del Mar.  A Corona del Mar couple in the real estate flipping busines. They’re track record is astounding, averaging a 48% gain in 92 days.

Their scheme?  Why it’s simple, of course.  By a bank foreclosure for cheap.  Say you’re flipping it, and then sell it for gobs more in a mere 30 – 90 days.  Oh, need a buyer willing to go along with this scheme?  No problem, just pick one of your many nearby relatives (that happen to have alternate names) or what about the family gardener?  Oh, wait, you also need a down payment?  No problem, when your family owns an escrow company.  Just increase the sales price and say the buyer is putting 10-20% down.  You won’t have to actually show the money, because your escrow company is working with you.  Oh, shoot, you also need a bank that you can trick?  Why, no problem, WaMu is ready and willing to help out (they’ll even use their “preferred” appraisers to make sure the loan goes through).

Don’t believe it?  Get the full story at the OC Register (“WaMu loaned millions to O.C. home flippers with fraud history” by John Gittelsohn).  It’s along article, but the schemes these people pulled just get better and better. Here’s an outline, per the Register, of their property “flips”:

2129 W Civic Center Dr, Santa Ana 92703; 3 bed/1 bath; 1,050 sq ft; built in 1955

Jul 9, 2007: Supriti Soni buys for $440,000 ($352,000 WaMu mortgage)

Aug 16,2007: Javier Hernandez (the gardener) buys for $660,000 ($594,000 WaMu mortgage)

Jul 1, 2008: WaMu forecloses with deed of $377,137

827 S Flower St, Santa Ana 92703; 1 bed/1 bath; 590 sq ft; built in 1920

Jan 4, 2008: Sushama Lohia (Supriti’s mother) buys for $259,000

Jan 24, 2008: Suniti Shah (Lohia’s daughter, Supriti’s sister) buys for $575,000 ($488,750 WaMu mortgage)

1530 S Parton St, Santa Ana 92707; 2 bed/1 bath; 818 sq ft; built in 1948

Aug 30, 2007: Sushama Lohia (Supriti’s mother) buys for $430,000

Nov 9, 2007: Eligio Rojas (innocent “bystander”) buys for $640,000 ($575,800 WaMu mortgage)

1029 W Brook St, Santa Ana 92703; 2 bed/1 bath; 735 sq ft; built in 1953

Date n/a: Sushama Lohia (Supriti’s mother) buys at unknown price.

Dec 12, 2007: Sells to Supriti Soni (Lohia’s daughter) for $595,000  ($595,000 WaMu mortgage)

946 W Camile St, Santa Ana 92703; 2 bed/1 bath; 1,040 sq ft; built in 1922

Jul 31, 2007: Suniti Shah (Lohia’s daughter, Supriti’s sister) buys at $443,181

Nov 21, 2007: Sells to Colomba Cortez ( $558,000 WaMu mortgage)

According to the article:

“Records show that Washington Mutual, America’s largest savings and loan and one of its most precariously perched lending institutions, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since early 2007.

Of the 22 homes sold in that period, at least six have become problems for Washington Mutual: Four were foreclosed, one received a notice of default and another was listed for sale at a $260,000 loss. Total value of WaMu’s mortgages on the troubled properties: $2.7 million.”

So, what was WaMu thinking?  Well, just look at today’s state of WaMu and it doesn’t take much to see that they weren’t thinking… logically, anyway.  They were after money.  Even in a failing market, they were still willing to throw out huge mortgages at properties that have no business being over $300k.  In their minds, it was okay, there was a 10-20% deposit (which probably never existed). It’s just like Wells Fargo in the other Santa Ana case I wrote about in July (“Who’s got the lower IQ? Wells Fargo or these owners?“).

However, in WaMu’s case, what takes it from just bad business practices to fraud by WaMu is the fact that they pressured their contracted appraiser company to only use a group of appraisers that give the right, top dollar appraisal.  The appraisal company folded to WaMu’s pressure, since WaMu was their biggest customer.  In a way, it’s like good old karma… if you’re going to have shady practices, then you deserve shady customers.

The Sonis have a criminal record already.  They were convicted of fraud in 2003 , but that didn’t stop their profitable ways.  Add to these fraudulent flips identity theft where they got furniture, loan proceeds and commissions, a Mercedes Benz, and plain hard cash.