Federal prosecutors Monday announced a guilty plea from a Danville man who allegedly participating in a builder bailout scheme designed to inflate housing prices at the peak of the nation’s mortgage crisis.
Ayman Shahid, 39, of Danville, former president of Discovery Sales Inc. (DSI), entered the guilty plea in federal court in Oakland, admitting to conspiracy to commit bank fraud.
Shahid is the latest and highest placed individual charged by the U.S. Attorney’s Office of the Northern District of California as a result of a wide-ranging investigation by the FBI into mortgage fraud conducted in connection with the sale of homes by DSI and its affiliates.
Shahid was the president of DSI, which was the sales arm of affiliated residential construction companies, including Discovery Home Builders and Albert D. Seeno Construction Co. Prosecutors charged that DSI was created to sell new homes built by Discovery Builders Inc. (DBI), Albert D. Seeno Construction Co. Inc. (AD Seeno) and other entities affiliated with Albert Seeno III and the Seeno family. The homes were built in developments throughout the East Bay Area, including in Contra Costa and Alameda Counties.
In connection with his plea agreement, Shahid admitted that he conspired with others to fraudulently cause bank underwriters to approve mortgage loans for unqualified buyers during the height of the financial crisis. From 2006 to 2008, when Shahid was DSI’s vice president, buyers with little or no money of their own were induced to purchase homes at prices that were inflated through the use of financial incentives.
Buyers, it was alleged, were not required to possess or post any of their own money when buying a home; DSI, the builders and their affiliates provided money to buyers to make down payments. Further, DSI inflated the sale price of the new homes by offering significant cash and other incentives to new home buyers. The primary purpose of the price inflation was to support a large line of credit maintained by the builders; the new homes and the property on which the homes would be built collateralized the line of credit.
“Shahid and his coconspirators were responsible for saddling the banking system with dozens of fraudulent mortgage loans without regard for the damage those loans would cause to individual home buyers, downstream investors, and, ultimately, the U.S. economy as a whole,” said U.S. Attorney Melinda Haag. “Shahid fraudulently inflated the price of homes purchased by individuals who were unable to pay their mortgages in the long run. By doing this to serve their own narrow economic interests, Shahid, and actors like him, contributed to the housing bubble.”