One Phoenix homebuyer thought he had found a great deal when Zavier Kay Hafiz of ZK Group sold him a house in 2012 and even provided the financing.
The buyer was making regular monthly payments to Hafiz when another lender began foreclosure on the house.
An FBI and Arizona Attorney General’s Office investigation found that Hafiz, also known as Xavier Hafiz DeAnda and Hafiz K. Sanad DeAnda, had taken out his own loan on the house. He wasn’t making payments on that loan, which the buyer knew nothing about.
The investigation found Hafiz, 31, misled almost 40 other homebuyers on similar real-estate deals in Arizona. In May, he pleaded guilty to fraud and was sentenced to six years in prison and ordered to pay $3.5 million in restitution.
Thanks to bad deals like the ones perpetrated by Hafiz, Arizona ranks No. 4 nationally for mortgage fraud, according to a leading monitor of the crime.
During the past year, federal and state regulators have cracked down on dozens of fraudulent real-estate deals in Arizona that have cost homebuyers and investors hundreds of millions of dollars.
In May, former Phoenix contractor Paxton Jeffrey Anderson was sentenced in U.S. District Court to eight years in prison for mortgage fraud. His bookkeeper, Joseph John Plany, got a four-year term. They were ordered to pay $3.27 million in restitution for lying to lenders to get construction loans, often in the names of their friends and family without their permission.
Anderson and Plany would use the money from the construction loans for their own expenses, including trips to the Kentucky Derby and gambling, according to court documents. Many victims of the scheme lost homes to foreclosure and were forced into bankruptcy.
“Anderson was the mastermind who diverted hundreds of thousands of dollars to finance his love for horse racing and gambling, while Plany supervised the day-to-day details of the fraud and failed to alert unsuspecting borrowers to the illegal diversion of funds,” said Dawn Mertz, special agent in charge of the Internal Revenue Service investigation.
U.S. Attorney John Leonardo called the Anderson-Plany scam another “reminder of the damage mortgage fraud has caused to our community.”
Arizona has ranked in the top five states for mortgage fraud on the LexisNexis Annual Mortgage Fraud Report since the housing boom, when cash-back deals became common. The deals, made possible by loose lending guidelines, revolved around speculators flipping houses among themselves every few months and taking cash out of each deal.
At the time, I remember some, who thankfully aren’t in the real-estate industry anymore, questioning whether cash-back deals and other mortgage fraud really hurt anyone.
These bad real-estate deals artificially inflate home values, lead to foreclosures and cost taxpayers, who back many of the fraudulent mortgages through government-owned Fannie Mae and Freddie Mac, billions of dollars every year.
We are all victims of mortgage fraud.