Indian American Vijay K Taneja, popular in the community for his mega Bollywood shows in the US, has pleaded guilty to a massive $33 million mortgage fraud, the Federal Bureau of Investigation (FBI) has said.
The money was apparently used to fund Taneja's Bollywood ventures, including investment in several films, the investigating agency said on Thursday.
The US District Court in Alexandria has scheduled the sentencing in the case for Jan 30. A resident of Fairfax, Virginia, Taneja faces 20 years of incarceration and a fine of $500,000, which is the penalty for conspiracy to commit money laundering.
FBI said Taneja, 47, was involved in a massive mortgage fraud scheme through his company Financial Mortage Inc (FMI), which originated and sold mortgages on residential properties in and around the Washington area.
A large number of Indian Americans in and around Washington area have been a victim of his mortgage fraud.
According to court documents in support of the guilty plea, before FMI sold its mortgages to financial institutions as long term investors, it utilised another group of financial institutions to temporarily fund the mortgages before they were sold.
Beginning in 2001, FMI began defrauding a series of warehouse lenders and eventually two other financial institutions serving as long term investors, causing an accumulated loss of at least $33 million to four financial institutions by the time FMI filed for bankruptcy in June 2008, the FBI said.
The financial institutions included First Tennessee Bank, Franklin Bank, Wells Fargo Bank, and EMC Mortgage Corporation, a wholly owned subsidiary of JP Morgan Chase & Co.
FBI said Taneja accomplished the mortgage fraud scheme by creating fictitious loans with bogus loan closings, selling the same legitimate loan to multiple investors, and pocketing the proceeds generated from refinancing loans, when the bulk of those proceeds were intended to pay off prior mortgages on the same properties.
Court documents state that for at least part of the scheme, Taneja conspired with the owner of TitlePro, a Fairfax title company. The company went out of business in May, 2008, FBI said.
In a report, The Washington Post said prosecutors told the judge that Taneja invested millions of his mortgage proceeds in Indian films and theatrical productions through one of his companies Elite Entertainment. The details are still being investigated.
"He has millions of dollars unaccounted for. There's so much money, and it's difficult to figure out where it all went," Assistant US Attorney Stephen was quoted as saying.