Saturday, August 14, 2010

3 Carmichael Residents Among 8 Charged in $11.4 Million Real Estate Fraud

An alleged $11.4 million Sacramento real estate fraud scheme that promised investors up to 15 percent returns from land development and house flipping has resulted in charges against eight people for mail fraud, wire fraud and money laundering, the U.S. attorney's office said Friday.

A federal grand jury Thursday indicted the eight, including three from Carmichael, for allegedly defrauding scores of investors throughout the nation.

The U.S. attorney's office in Sacramento said the defendants were associated with Heaven Investments Holding Co., which lured investors with promises to develop luxury townhouses and condominiums in Sacramento during the housing boom. The investment firm also promised to buy, rehab and sell Sacramento-area single-family houses and do the same with a hotel in Oakland.

But as the real estate market crashed, the family-owned Sacramento company instead allegedly paid returns to early investors with money raised from later investors. Defendants also stalled investors seeking money by intentionally failing to sign checks and saying checks were lost in the mail, the indictments state.
"Most (investors) were outside the local Sacramento area," said the federal prosecutor for the case, R. Steven Lapham. "I think that was by design. Anybody in the Sacramento area could have driven by the properties and seen that no development was going on."

Heaven Investments, which opened in 2000, solicited investors from January 2006 to August 2008, the indictments state. The firm filed for Chapter 7 bankruptcy in August 2008, according to Sacramento federal bankruptcy court records. It has since been liquidated.

Charged in Thursday's federal grand jury indictments were Heaven Investments chief executive officer Akbar Bhamani, 56; vice president Aly Khan Bhamani, 28; and finance director Feroza Bhamani, 55. All three are from Carmichael.

Also charged were vice president Zainulabidin Akbar Bhamani, 30, of Sherman Oaks; director of operations Ken Sarna, 46, of Vallejo; and marketing director John Pierre Quintana, 30, of Dixon. The grand jury also indicted Heaven's accounting and payroll director, Laila Bhamani, 57, of Tracy, and Global Financial & Assets Inc. loan officer Shaun Bhamani, 26, of Valencia.

All but Laila Bhamani pleaded not guilty Friday in federal court in Sacramento and Los Angeles. Laila Bhamani is scheduled to appear Monday in Sacramento federal court, said Lapham.
All face 20-year maximum penalties on each charge.

Attempts to reach the Carmichael defendants Friday for comment were unsuccessful.
The grand jury indictments allege that Heaven Investments misrepresented itself to investors, claiming to have an in-house architectural staff and construction company.

"That was untrue," Lapham said Friday.

Three of the defendants – Zainulabidin Bhamani, Aly Khan Bhamani and Shaun Bhamani – are also charged with eight counts of mail fraud in a separate alleged mortgage fraud scheme. Indictments say they tried to raise money as market values fell by recruiting straw buyers for eight Sacramento-area properties. Seven of the properties have since been repossessed, resulting in lender losses of $775,000. The eighth property is being foreclosed.

The indictments stem from investigations by the FBI and the Internal Revenue Service, U.S. attorney Benjamin Wagner said Friday.

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