Monday, July 20, 2015

Arizona Real Estate Operator Gets Six Years In $3.5M+ Contract For Deed Ripoff That Duped Nearly 40 Unwitting Victims; Scammer Targeted Unsophisticated Homebuyers, Pocketing Monthly Installments While Failing To Disclose Or Make Payments On Pre-Existing Mortgages, Or Provide Title Insurance Policies

From the Office of the Arizona Attorney General:
  • The Arizona Attorney General’s Office recently reached a plea agreement with Zavier Kay Hafiz, after an FBI-led investigation revealed his company fraudulently misled nearly forty victims to whom he sold real estate throughout Arizona. Mr. Hafiz, while doing business as ZK Group, plead guilty on May 7, 2015 to Fraudulent Schemes and Artifices and was sentenced to six years in prison, followed by another seven years of probation. In addition, he was ordered to pay $3,554,838.40 in restitution.

    Hafiz’s guilty plea was a result of a fraudulent house sale in early 2012. While preying on “generally unsophisticated real estate buyers”, Hafiz sold a house to and provided the loan for the purchase to a Phoenix victim. Throughout his negotiations with the victim, Hafiz fraudulently represented that title to the house was good, and clear from any other claims.

    The truth however, was that Hafiz had already taken out a mortgage from a hard money lender on most, if not all, of the properties he sold
    , including this one. Hafiz perpetuated this cycle of fraudulent misrepresentation repeatedly in ZK Group’s business dealings. (1)

    While his victim consistently made payments on his loan to Hafiz, Hafiz himself failed to make payments to the mortgage holder on the property. After the default, the mortgage holder began foreclosure proceedings against the victim and his house. It was only when Hafiz learned of the FBI investigation that he paid the remaining balance to the mortgage holder, stopping the foreclosure proceedings. As a way to settle with the victim, he also then transferred title of the house to the victim, trying to erase the previous loan.

    Hafiz’s guilty plea followed an in-depth FBI investigations going back several years. Following the investigation, a Grand Jury indicted Hafiz on four separate charges related to the fraud. The Attorney General’s Office prosecuted Hafiz on all four counts related to just this one victim. As part of the plea agreement, the Attorney General’s Office agreed to drop the three less serious charges in exchange for his guilty plea to the most serious fraud charge.(2)
Source: Attorney General's Office Reaches Plea Agreement with Serial Fraudulent Real Estate Investor.

Go here for:
Go here for earlier stories on screwed over homebuyers who have been peddled properties through the use of the predatory instruments of choice for real estate scammers:
(1) According to page 5 of the plea agreement, a key element in this racket, in addition to the targeting of generally unsophisticated homebuyers, was the conducting of sale closings without the use of a traditional title company, and without the issuance of title insurance policies to protect the buyers. In effect, the unwitting victims were left buying a pig in a poke.

(2) According to the indictment, the other three charges were forgery, theft by extortion, and residential mortgage fraud. The guilty plea related to the charge of Fraudulent Schemes and Artifices.

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