SEATTLE - A grand jury has returned a 40-count indictment against seven people accused of running a mortgage fraud scheme in Seattle's suburbs.
Those charged include the operators of Kobay Financial Corp., Nationwide Home Lending and Emerald City Escrow, all of Bellevue. The indictment says they used straw buyers or other unqualified buyers with vastly overstated incomes to artificially inflate home values and acquire more than $46 million in mortgages from ING and Washington Mutual banks, among others.
The indictment says that, from Sept. 15, 2005 to Dec. 31, 2008, the defendants conspired to commit bank fraud, mail fraud and wire fraud.
Nationwide, which is not affiliated with Nationwide Lending Corp. or Nationwide Mutual Insurance, closed last fall.
The indictment alleges the defendants took $9 million for themselves, using the money to buy luxury cars and boats, among other things. The straw buyers were paid for their participation.
FBI says this case is just the tip of the iceberg on cases the are seeing around the country.
"This is an example of what we're seeing in mortagage fraud around the country," said U.S. Attorney Jeff Sullivan.
Defendants are Vladislav Baydovskiy and Viktor Kobzar, who ran Kobay, and their employee Camie Byron; Alla Sobol, who ran Nationwide; David Sobol and Donata Baydovskiy, who ran Emerald City; and Sandra Thorpe, a bookkeeper who allegedly prepared false letters verifying employment for buyers.
They face up to 30 years in prison.
Four of the defendants were arrested Thursday made initial appearances in U.S. District Court later in the day.
"We'll wait to see what the government has to say. They made a charge and now the obligation is on them to prove what it is that they say. Where's the beef?" said Jeff Grant, Byron's attorney.
Some of the alleged conduct is already the target of a federal racketeering lawsuit that ING brought against Nationwide and Emerald City earlier this month.
In that lawsuit, criminal defense lawyer Jacob A. Korn, an officer of Emerald City, and Alla Sobol are identified as the leading conspirators and accused of taking excessive fees. Korn is not charged in the indictment, but is referenced by his initials.
Leslie Drake, a Kirkland lawyer who represents the Sobols, did not immediately return a call seeking comment Thursday. It was not immediately clear if the others had obtained lawyers.
Prosecutors are seeking to have the defendants forfeit luxury cars, including two Lamborghinis; a 32-foot Bayliner boat; and millions of dollars.