Michele Beckwith Acting U.S. Attorney | U.S. Attorney for the Eastern District of California
Jyoteshna Karan and Praveen Singh, both residents of Modesto, California, have been sentenced for their involvement in a multi-million dollar mortgage fraud scheme. Acting United States Attorney Michele Beckwith announced the sentencing, stating that Karan will spend three years and four months in prison while Singh has been sentenced to two years.
From 2006 to 2015, Karan and Singh orchestrated a series of unlawful activities involving real estate transactions in areas from Modesto to Sacramento. They engaged in straw purchases and short sales of approximately 15 homes. Straw purchases involve one individual buying a property on behalf of someone else to circumvent specific restrictions. Such practices are typically illegal in the real estate industry due to their impact on lenders' risk management processes. On the other hand, short sales occur when a homeowner sells their property for less than the owed mortgage amount, usually with the lender's approval, to avoid foreclosure. These transactions generally need to be at arm's length to protect all parties involved from undervaluation or overpayment.
Karan and Singh would allow the homes they acquired to enter foreclosure before arranging short sales with lenders. They subsequently flipped the properties, selling them at market rates to other individuals and gaining significant profits, causing lenders losses exceeding $3,000,000.
The two were skilled real estate professionals who employed unsuspecting participants, falsified documents, and created shell companies to execute their fraud. In one instance, Singh’s mother served as a straw purchaser, with fabricated documents suggesting that the straw purchasers were earning substantial salaries from the shell companies. They also faked documents to simulate arm's length transactions, misleading lenders into approving the deals.
The investigation into this case was a collaborative effort by the FBI, FDIC OIG, and the Stanislaus County District Attorney’s Office. Assistant United States Attorney Joseph Barton led the prosecution.
