by Andrew Murray | October 1st, 2019
On August 16, the Department of Justice announced sentencing for three of the coconspirators in a Small Business Administration fraud case. The Press Release states:
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Rafid Latif, 54, of Charlotte, N.C., was sentenced to 84 months in prison; Imtiaz Shareef, 40, of Bossier City, Louisiana, was sentenced to 57 months in prison; and Ejaz Shareef, 42, of Mt. Royal, New Jersey, was handed down a 48-month prison sentence. In addition to the prison terms imposed, Judge Conrad ordered each defendant to serve two years under court supervision upon completion of their prison terms, and to pay $795,435.33 as restitution. Latif was ordered to pay additional restitution in the amount of $999,487.99.
In December 2018, a federal jury convicted the three men of conspiracy to commit wire and bank fraud and conspiracy to commit money laundering. A fourth co-defendant, Biren Seth, 42, of West Caldwell, New Jersey, previously pleaded guilty to conspiracy to commit wire and bank fraud for his role in the scheme, and was sentenced to 33 months in prison, followed by two years of supervised release.
According to filed court documents, evidence presented at trial, and today’s sentencing hearing, from 2010 to 2018, Latif, Ejaz Shareef, and Imtiaz Shareef, conspired with each other and Sheth to defraud the U.S. Small Business Administration (SBA), various banks, and an insurance company through the operation and sale of two Charlotte-area hotels, the Days Inn located at 1408 West Sugar Creek Road, and the Arlington Suites located at 4416 South Tryon street.
Trial evidence established that the conspiracy involved three inter-related schemes: an insurance fraud scheme; a fraudulent loan-kickback scheme; and a short-sale scheme. According to court records, in 2010, Latif, Ejaz Shareef and Imtiaz Shareef were the operators of the Days Inn hotel. In that capacity, the three co-defendants engaged in a scheme to obtain fraudulent reimbursements from an insurance company for fictitious repairs and remodeling expenses at the Days Inn hotel. By submitting fake documents and bogus proofs of payment, the co-defendants obtained more than $825,000 from the insurance company, and then used a portion of the money to facilitate bank loan fraud schemes involving the two hotels.
According to trial evidence, in 2012, the defendants obtained an SBA loan from a bank in order to finance the purchase of the Days Inn hotel. The co-conspirators obtained the loan by making several false material representations including presenting the bank with fraudulent documents such as an inflated lease-purchase agreement; by misrepresenting the source of the down payment, which was the fraudulently-obtained insurance money; and by failing to disclose to the bank that the co-conspirators would receive nearly $700,000 as a kickback from the hotel’s inflated sale price.
In addition to the fraudulent scheme involving the Days Inn hotel, Sheth and Latif engaged in separate fraudulent loan scheme involving the Arlington Suites hotel. Trial evidence established that, as a favor for Sheth’s assistance in facilitating the purchase of the Days Inn hotel, Latif agreed to help Sheth with the fraudulent short sale of the Arlington Suites hotel. Sheth owned the Arlington Suites hotel, which was in part financed with an SBA loan. With Latif’s help, Sheth defrauded SBA by convincing SBA to agree to a short-sale when Sheth fell behind on his payments. According to trial evidence, Sheth arranged to “sell” the Arlington Suites hotel to a corporation in Latif’s name. This sham sale was in name only. According to trial evidence, Sheth convinced SBA to charge off nearly $1 million of the balance Sheth owed on the existing loan. Because Latif was only a straw purchaser and Sheth remained the true owner of the hotel, the $1 million represented an immediate increase in Sheth’s equity in the Arlington Suites hotel.
According to evidence presented at trial, Latif further defrauded SBA in connection with the Arlington Suites sale by obtaining another SBA loan to finance the purported purchase of the hotel. Latif secured the SBA loan by using false and fraudulent documentation and making material representations about the down-payment money, among other things.
In 2014, Sheth transferred to Latif $690,000 in kickback funds from the Days Inn sale, after Latif threatened to expose the Arlington Suites short-sale fraud.
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