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Fake Pay-off Statements Used in Scam

Six Refis on Two Properties Equals Six Years

Alexandria, Va. – (September 5, 2008) John Andreas Tsiaoushis, 41, of Alexandria, Virginia, was sentenced today on charges of mail fraud and false oaths in bankruptcy in connection with a mortgage refinancing scheme that took place from approximately December 2004 to November 2007. United States District Judge Liam O’Grady sentenced Tsiaoushis to 70 months in federal prison, 3 years supervised release, and ordered him to pay $3,925,596 in restitution. Chuck Rosenberg, United States Attorney for the Eastern District of Virginia; W. Clarkson McDow, Jr., United States Trustee; Joseph Persichini, Jr., Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office; Guy J. Cottrell, Postal Inspector in Charge, U.S. Postal Inspection Service, Washington Division; Jeffrey Irvine, Special Agent in Charge, U.S. Secret Service, Washington Field Office; and, Peter McClintock, Acting Inspector General, Small Business Administration, announced the sentencing.

Tsiaoushis admitted to operating a mortgage fraud scheme between approximately December 2004 and November 2007. According to court documents, Tsiaoushis fraudulently attempted to obtain an estimated $4,372,981.13, and successfully obtained an estimated $3,697,161.13 through the scheme. Court documents also indicate that, while the mortgage fraud was ongoing, Tsiaoushis engaged in a check kite scheme through which he obtained an estimated additional $163,546 by overdrawing his accounts with several Virginia banks. To carry out the mortgage fraud, Tsiaoushis transferred or refinanced two Virginia residential properties, one located in Vienna, Virginia, and one located in Alexandria, Virginia, on six occasions. In applying for loans, he provided the would-be lenders with false documentation, such as false loan-payoff statements purporting to be from current mortgagees, and false Certificates and Affidavits of Satisfaction purporting to be from prior mortgagees. He then arranged for the loan proceeds to be misdirected to himself by causing the title companies closing the loans to send checks for the proceeds, which were ostensibly to be used to pay off pre-existing mortgages on the properties, to commercial mail drop boxes that had been opened by friends, associates, and family members.

Tsiaoushis, who had filed for bankruptcy with the United States Bankruptcy Court for the Eastern District of Virginia in October 2005, also admitted to giving false testimony in a hearing before that court about selling one of the residential properties involved in the mortgage fraud scheme.

Khalil Salim Arbid, an associate and former driver for Tsiaoushis, was sentenced on April 4, 2008, by United States District Judge James C. Cacheris to 16 months in federal prison, 3 years supervised release, and ordered to pay $650,613.61 in restitution for his role in the scheme.

The case was investigated by the Federal Bureau of Investigation, U.S. Postal Inspection Service, U.S. Secret Service, and Small Business Administration – Office of the Inspector General. Assistant United States Attorney Thomas H. McQuillan and Special Assistant United States Attorney Dennis J. Early of the Office of the United States Trustee prosecuted the case for the United States.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.

SOURCE: United States Attorney's Office
Eastern District of Virginia

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