A Huntington Beach man was sentenced Tuesday to six years and six months in federal prison for his role in a scheme that led to the fraudulent purchases of more than 100 condominiums around the country.
U.S. District Judge Andrew Guilford also ordered Maher Obagi, 32, to pay about $10 million in restitution. A federal jury in 2015 found Obagi guilty of one count of conspiracy and three counts of wire fraud.
Mohamed Salah, 43, of Mission Viejo also was convicted in 2015 of one count of conspiracy in the scheme. He was sentenced Tuesday to 57 months in federal prison and ordered to pay about $7 million in restitution, according to court records.
Several other people also have been charged in the case, including Ali Khatib, 53, of Newport Coast, who pleaded guilty to a felony count of bank fraud and is scheduled to be sentenced July 16.
Prosecutors alleged that Obagi and Salah, along with other defendants, operated a “builder bailout” mortgage fraud scheme through Excel Investments and related companies based in Santa Ana and Irvine.
“The scheme involved kickbacks from condominium builders during the 2008 financial crisis, kickbacks that were hidden from lenders to convince them to fund loans in excess of actual purchase price,” the U.S. attorney’s office said in a statement.
Prosecutors said the group identified condominium developments in California, Florida and Arizona where developers were struggling to sell units and then arranged with the builders to buy multiple condos at a discount.
Group members bought units for themselves and their relatives and on behalf of “straw buyers” with good credit scores who were recruited under the guise that the purchase was an investment opportunity that required no down payment and would generate rental income, prosecutors said.
“The builders benefited by making it appear that their condos were selling and maintaining their value, while members of the conspiracy obtained the kickbacks,” according to the U.S. attorney’s office.
To get mortgage loans, authorities said, the group used fake employment and income information and fabricated pay stubs, W-2 forms and bank statements.
Based on the false information in the loan applications, mortgage lenders provided more than $21 million in financing to buy more than 100 properties, according to authorities. Many of the loans went into default and mortgage lenders lost more than $10 million after foreclosing on the properties.