DA: Scammer sought to bilk homeowners
BY J.D. HILLARD
Attorneys Pamela Simmons and Bill Purdy knew they were on to something big when the second man came into their office complaining about the numbers in his refinance loan.
Simmons and Purdy, who operate the Law Offices of Simmons and Purdy in Soquel, specialize in mortgage issues. In early May, two men came to them with questions about mortgages they had recently obtained.
Both of the men had received sales calls offering new loans with lower payments. They had both expressed interest and, during visits to their homes by a man who called himself Zak Kahn, both signed new mortgages, Simmons said. Once the loans closed, they noticed fees they had not been aware of, Simmons said.
In addition, the paperwork from the mortgages had several problems, Purdy said.
"You could hold it up to the light and see where he had altered his fees," Purdy said.
With two similar cases in front of them, the attorneys knew there must be more.
"If I have two people with the same exact problem in my office, what it means is there is a really big problem," Simmons said.
One of the borrowers had arranged a meeting with Kahn to go over questions stemming from the discrepancies, so Simmons asked Watsonville police to attend.
Kahn, whose real name is Altaf Abdulrehman Shaikh, was arrested after a Watsonville police officer asked him some shrewd questions, Simmons said. When he was arrested, the officer found a book of records containing 129 loans.
Simmons called friends in the Santa Cruz County District Attorney's Office, where she used to work. The office had received grants to investigate just this kind of crime, she said.
In Assistant District Attorney Bill Atkinson's office is a plaque given by World Savings, the bank that made all of the questionable loans, to Secure Financial Inc., the Union City company under whose auspices Shaikh did business. The plaque honors the company as a "top broker" in recognition of "your tremendous loan volume for 2004."
Shaikh took on several parts of the loan process that normally would be handled by separate parties, Atkinson said. Where a borrower would typically take a loan out from a broker and meet with an escrow officer and a title insurance company, Shaikh took care of everything in a single meeting, Atkinson said.
The loans the borrowers signed did give them the ability to make lower payments. However, the rates were generally higher and caused the borrowers' loans to grow even as they made each payment, Atkinson said. The loans also included penalties for borrowers who tried to pay off principle ahead of schedule, he said.
Many of the loans included thousands of dollars in fees paid to a company called Bay Area Marketing, Atkinson said. While Shaikh denied knowledge of the company, a search turned up a business card identifying him as its president, Atkinson said.
Even if Shaikh weren't defrauding people of the hidden fees, federal law requires him to disclose that the payment plans would result in the overall growth of the loan.
Documents at the Santa Cruz County Recorder's Office show three such loans were made to Watsonville residents, one to a Freedom resident, one to an Aptos resident and four to Santa Cruz residents. The loans range from $230,000 to $510,000. Similar loans were made to residents of Monterey, San Joaquin, San Mateo and Santa Clara counties, Atkinson said. Atkinson filed a criminal complaint against Shaikh on Wednesday accusing him of 10 counts of first-degree burglary for entering people's homes with the intent to steal money from them. Shaikh was arrested at his Fremont home Thursday. Atkinson expected that each of the 129 records in Shaikh's books represented another illegal loan.
Because of the criminal origin of the loans, Purdy and Simmons said they expect World Savings to allow all the borrowers to renegotiate their loans. Each of them qualifies for a better interest rate than Shaikh got them, Simmons said.
Anyone who thinks they might have fallen victim to a similar scheme should contact an attorney, Atkinson said. Purdy and Simmons offer to look over loan documents for free.
Anyone with information that might be related to this case should contact district attorney's inspector Mike Lindsey at 454-3587.
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Reprinted with permission.
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