DENVER — A Commerce City man convicted as a co-conspirator in a mortgage fraud scheme was sentenced to 63 months in prison last month.
U.S Attorney John Walsh of the Colorado District announced March 19 that Derek Zar, 30, of Commerce City, and Michael Jacoby, 44, of Castle Rock, were sentenced last month by U.S. District Court Judge Kathryn H. Vratil. Jacoby netted a 108-month sentence, according to a release from Attorney’s Office spokesman Jeff Dorschner.
Following his 108-month prison sentence, Jacoby was ordered to spend five years on supervised release and pay $2,979,712 in restitution. Zar was ordered to spend three years on supervised release and pay $1,417,902 in restitution.
Jacoby, Derek Zar and co-conspirator Susanne Zar were found guilty last August, the result of a four-week trial. Susanne Zar is scheduled to be sentenced on July 2, 2013. All were indicted by a federal grand jury Sept. 27, 2010, in Denver. A superseding indictment was filed Sept. 15, 2011.
According to the indictments and testimony at trial, between January 2005 and September 2006, the trio devised a scheme to defraud various financial institutions and other commercial lenders that funded residential mortgages, and used fradulent information to buy or sell 18 Colorado properties.
Using cash lent by Jacoby to purchase homes at discounted rates with Jacoby acting as realtor for the sales, the Zars bought the homes through limited liability companies they owned and operated and then resold these homes within a very short time period to themselves as individuals at inflated prices financed by mortgage loans.
Additionally, Susanne Zar often refinanced the homes with mortgage loans based on an inflated value. Sometimes the inflated value was supported by false documentation showing a higher initial purchase price than the actual initial purchase price. The defendants also prepared and submitted and caused to be prepared and submitted applications for loans which contained various materially false and fraudulent representations.
The trio were also accused of submitting false appraisals, with Jacoby supplying infalted values of comparable homes to an appraiser who then supplied information to mortgage brokers. At closing, through a grant program, the defendants funneled money back to the home buyer who was one of the defendants. They concealed from the lenders and other parties associated with the transactions that the home buyer was receiving a kickback for buying the home.
“As the financial crisis of 2008 showed, mortgage fraud harms all Americans, not just banks and homeowners,” said U.S. Attorney John Walsh. “In this case, two people who scammed the system of millions ended up spending years in federal prison.”
“Mortgage fraud undermines public confidence in achieving the American dream and jeopardizes the well-being and stability of our financial institutions,” said FBI Denver Acting Special Agent in Charge Steve Olson. “The sentences announced today redress some of the damage caused by these defendants. The FBI will continue to work diligently to identify and investigate those who perpetrate these types of schemes.”
“Mortgage fraud directly threatens the financial health of the communities in which we live; IRS CI will work diligently with our law enforcement partners to insure mortgage fraud is vigorously investigated and individuals are brought to justice,” said Stephen Boyd, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
The case was investigated by special agents with the Federal Bureau of Investigation and IRS-Criminal Investigation.
The case was prosecuted by Assistant U.S. Attorneys Suneeta Hazra and Jamie Mendelson.