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U.S. SENTENCING MEMORANDUM - 1

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

The Honorable Thomas S. Zilly

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE 

UNITED STATES OF AMERICA, ) NO. CR05-381TSZ

)

Plaintiff, )

) UNITED STATES’ SENTENCING

 v. ) MEMORANDUM

)

AKRAM ASWAD ALMUSSA, ) Hearing Date: October 19, 2007

)

Defendant. )

)

I. INTRODUCTION AND RELIEF REQUESTED

Defendant is in violation of the terms of his appearance bond. It is extremely

unlikely that he will actually appear at the sentencing hearing currently set for Friday,

October 19, 2007. If Defendant does appear, the government will recommend that he be

sentenced to 71 months, the top of the advisory range. 

II. BACKGROUND

A. THE NATURE OF THE SCHEME

Sometime in 2003, Almussa’s co-defendant, Josh Kebede, became a member of a

large-scale mortgage fraud ring using the so-called “credit investor” mortgage fraud

scheme. Kebede ultimately felt that he was not receiving all he was promised from the

leaders of the other conspiracy. 

It was in approximately this same time frame that he met Almussa, who was

working at the time as a loan officer with a mortgage broker. Kebede described how the

scheme worked, and Almussa agreed to assist Kebede. 

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U.S. SENTENCING MEMORANDUM - 2

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

The essence of both fraud schemes was to defraud mortgage companies by

obtaining mortgage loans under false pretenses. First, Almussa and/or Kebede would

enter into contracts to purchase residential real estate in arms-length transactions, thereby

locking up the properties. 

While those deals were still pending, the conspirators would recruit “straw buyers”

to purchase the same property for an inflated purchase price. There is no disputing that

the flip price was in fact inflated. First, as the Court will recall, the government was

prepared to introduce evidence that (a) almost all of the homes at issue in this case were

appraised by the same appraiser; and (b) that the appraisals were fatally flawed. See, e.g.,

Defense Motion to Exclude Proposed Expert Opinion (and Attachments), Docket 106. 

Since the trial, the government has retained Richard Hagar, SRA, to re-appraise each of

the properties in question. Mr. Hagar’s work confirms that the “flip” price was grossly

inflated as compared to it’s actual fair market value. 

The conspirators would then cause the straw buyers to apply for loans to finance

the inflated purchase price. Each loan application was made through Almussa, who

worked as a loan officer at a mortgage brokerage. The loan application - which was

prepared by Almussa - contained numerous material misrepresentations, including:

(a) inflated income levels, (b) fake employment information, and (c) false promises to

occupy the residence. 

Almussa also took other steps to conceal the true nature of the transaction from the

lenders. Specifically, Almussa provided falsified real estate purchase and sale

agreements to the lenders. These purchase and sale agreements purport to be between the

original seller and the straw buyer, omitting the intervening sale to Almussa and/or

Kebede. In at least some instances, the original seller’s signature was forged on this

particular document. This false document operated to conceal the “flip” transaction from

the lender, who would not have made the loan if they had known about the intervening

sale. 

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U.S. SENTENCING MEMORANDUM - 3

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

Almussa also caused third parties to make additional misrepresentations to the

lenders to support the falsehoods on the loan application. For example, John Gonzalez

admitted to acting as a recruiter for Almussa and Kebede. He has also admitted to

providing false employment verifications for some of the straw buyers, at Almussa’s

specific request. Gonzalez has also pleaded guilty, testified at trial, and has been

sentenced. 

The legitimate sale and the “flip” sale to the straw buyer would close on the same

day, through the same escrow. A portion of the fraudulently obtained loan proceeds

would be used to pay the original, legitimate seller, with the balance used to pay the

expenses of the conspiracy (including payouts to the straw buyers and other participants),

with Almussa and/or Kebede pocketing the difference. Almussa and Kebede did at least

four such transactions together, which were charged as part of Counts One (the

conspiracy charge) and Eight (a stand-alone substantive wire-fraud charge). Almussa and

Kebede had a falling out, and Almussa then proceeded to do additional transactions on his

own, with no involvement from Kebede. Some of those transactions were the subject of

Counts Two - Seven

Based on interviews with many of the participants, it appears that the goal of the

scheme was to speculate in the then-hot real estate market. Almussa had poor credit due

in part to a prior bankruptcy (more on this below), and accordingly could not legitimately

borrow money to gamble on real estate. 

Accordingly, Almussa resorted to using straw buyers with better credit to acquire

control of real property, remodel and/or hold it, and then sell it later for a higher price,

enabling the participants to pay off the original fraudulently-obtained loans, and make

additional profits. A portion of the cash proceeds that flowed from the “flip” were to be

used to pay construction costs and other expenses that went along with the remodeling

process. 

Ten separate transactions were discussed during the trial. The evidence

established that the conspiracy as a whole pocketed just under $1 million in profit on just 

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Almussa appears to have repatriated much of his profit to foreign locations. An 1

analysis of Almussa’s bank records by Rick Lynn, a forensic accountant, shows that Almussa

wired approximately $379,000 to accounts in Kuwait between December of 2003 and December

of 2004. After that date, and through August of 2005, approximately $76,000 was wired back

into the United States from various other financial institutions in the Middle East. 

 The loss on the 908 23rd Avenue Seattle property, referred to in paragraph 23 of the 2

PSR, is approximately $12,000. The fraudulent loan was for $305,000 (as compared to the

real, arms-length purchase price of $154,500). According to J.G., the straw buyer on the

house, the property was sold at a short sale, with the lender’s consent, for $293,000 to an

LLC towards the end of 2006. That LLC then resold the property for an even $300,000 in

March of this year. The additional $12,000 in loss does not change the Guidelines calculation

contained in the PSR.

U.S. SENTENCING MEMORANDUM - 4

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

the charged transactions ($990,570.25) discussed at trial. Adding in the other related

transactions would of course further increase that amount. 

The overwhelming bulk of the excess loan funds went to Almussa. Almussa also

received an additional $112,121.99 in commissions on the fraudulent loans, which was

pure profit for Almussa and not shared with his co-conspirators. 

1

B. LOSSES TO THE LENDERS

Under the Guidelines a defendant’s gain is not automatically the same as the

victim’s loss. Instead, where collateral exists, the Court is obligated to reduce the gross

loss amount by the amount recovered on disposition off the collateral - or, if that has not

occurred, by an estimate of the fair market value of the collateral as of the date of

sentencing. See, USSG 2B1.1, Application Note 3.E.ii. In an appreciating market (like

the Seattle housing market), this can sometimes result in the loss figure being smaller than

the defendants’ gain. 

By the government’s calculation, Almussa was responsible for approximately

$406,849 in loss, which is arrived at by taking the fraudulent loan amount for each

property, and subtracting the subsequent foreclosure or short-sale price. Those

calculations are summarized in paragraphs 14 - 24.2

More detailed loss information is still being compiled for purposes of calculating

restitution. The government therefore respectfully submits that the imposition of

restitution be deferred, assuming that sentencing goes forward as scheduled. 

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U.S. SENTENCING MEMORANDUM - 5

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

C. DEFENDANT’S HISTORY AND CHARACTERISTICS

Defendant’s basic biographical information is correctly outlined in the PSR. It is

true that Almussa has no prior criminal convictions. However, this is by no means

Almussa’s first foray into fraudulent activities. Rather, Almussa has been repeatedly

accused of, and sometimes sued for, fraud. 

For example, the PSR refers to Almussa’s prior employment at an art gallery. 

PSR, ¶ 81. The former owner of that venture, A.S., was interviewed by the FBI in late

2005. A copy of the report of interview of the owner was provided to the defense and to

Probation. A,S. alleges that Almussa embezzled approximately $100,000 from the

company prior to being terminated. 

The PSR also refers to Almussa’s bankruptcy, which was filed in the Western

District of Washington, Cause No. 03-19103-G. PSR ¶ 80. A review of the bankruptcy

file shows that numerous fraud claims were filed against Almussa by his creditors. For

example, a man named Ray Cafarelli filed an adversary proceeding within the

bankruptcy, alleging that Almussa had defrauded him by personally making false and

misleading statements on a Uniform Residential Loan Application - the exact same form

at issue in this case. Defendant ultimately settled that claim. 

III. GUIDELINES CALCULATION

The government agrees with the Probation Office’s Guidelines calculation. 

Pursuant to USSG § 2B1.1(a)(1) the base offense level is 7. It is increased by 14 levels,

because the loss amount is greater than $400,000 but less than $1,000,000. 

The government agrees that a four-level increase for Almussa’s leadership role in

the scheme is called for in this case. Mr. Almussa directly or indirectly recruited at least

eight straw buyers in this case. In addition, he suborned co-defendant John Gonzalez to

lie to the lender by fraudulently verifying some of the straw buyer’s fake employment

information. 

Almussa went to trial, and now appears to have fled. He is therefore not entitled to

any downward adjustment for acceptance of responsibility. This results in a total offense

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U.S. SENTENCING MEMORANDUM - 6

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

level of 27. Almussa is criminal history category I, which results in a Guidelines range of

57-71 months. 

IV. RECOMMENDATION

The government respectfully recommends a sentence of 71 months, the top of the

advisory Guidelines range. 

A sentence of 71 months reflects the seriousness of the offense and the defendant’s

role in that offense. There is little dispute that the offense is extraordinarily serious. 

Since the trial of this case, it has become increasingly clear that the mortgage industry is

afflicted with fraud at virtually every level. New Century Mortgage Corp., the primary

victim in this matter, has since declared bankruptcy and is in the midst of liquidation. 

More generally, the dislocations in the subprime mortgage market have adversely

impacted many other aspects of the economy. While it is certainly true that many of these

problems are attributable to lax underwriting standards, poor lending decisions, and

simple greed by lenders, fraud of this type is also a significant factor. 

Almussa was a loan broker, a person who is supposed to act as an intermediary

between people seeking to purchase houses, and entities prepared to lend money for that

purpose. He abused his position to enrich himself, at the expense of both the lenders and

some of the straw buyers. While some of the straw buyers knew or should have known

they were aiding and abetting a fraud, others lacked sophistication and are themselves

victims. The crimes in this case were not committed casually. Instead, they were the

product of a calculated course of conduct, perpetrated over a long period of time, and

involving considerable planning and sophistication. 

In addition, Almussa’s history and background show that this was not his first

foray into fraudulent activities. 

Finally, a sentence at the top of the Guidelines range is called for because the loss

figure in this case understates Almussa’s true culpability, for three reasons. First,

Almussa has deliberately protracted this case, asking for numerous trial continuances and

continuances of the sentencing hearing. One effect of the delay is that the general

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U.S. SENTENCING MEMORANDUM - 7

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

increase in home values in Seattle, and therefore the increase in the victim’s collateral,

tended to mitigate the loss amount. Put another way, the delay in this case has artificially

depressed the loss amount. 

A second and related point is that Almussa netted significantly more in ill-gotten

gains than the loss figure indicates. Almussa personally pocketed over $1 million in

proceeds, money which was used to finance a lavish lifestyle. 

Third, and perhaps most important, fraud schemes of this type cause market

distortions that harm the community in ways that go above and beyond the loss to specific

lenders. Individuals, real estate professionals, and government entities all look at past

comparable sale data in making decisions involving real estate. Flip transactions of this

type introduce incorrect pricing data into the market, which then infects decisions made

by other unwitting market participants. 

For example, a fraudulently inflated sale price to a straw buyer may be used by an

unwitting appraiser to determine the value of neighboring properties in calculating real

estate taxes. When a house that is worth $110,000 is “sold” in a non-arms length

transaction to a straw buyer for $210,000, a tax assessor likely will not detect that this

was not a market sale. Instead, the taxing authorities may use the flip price as a

comparable in determining the tax value of neighboring properties. This results in

incorrect, and higher, tax assessments for neighbors. The Guidelines do not reflect this

harm in any way. 

///

///

///

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U.S. SENTENCING MEMORANDUM - 8

(Almussa, CR05-381Z) UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

(206) 553-7970

V. CONCLUSION

For the reasons set forth above, the government respectfully recommends the

Court impose a term of 71 months of incarceration, to be followed by five years of

supervision on the terms outlined in the PSR. The government further submits that the

imposition of a restitution amount be deferred no more than sixty days. 

DATED this 15th day of October, 2007.

Respectfully submitted,

JEFFREY C. SULLIVAN

United States Attorney

/s/ Vincent T. Lombardi 

VINCENT T. LOMBARDI

WSBA # 21967

Assistant United States Attorney

700 Stewart Street, Ste. 5220

Seattle, Washington 98101

Facsimile: 206-553-4440

Phone: 206-553-5178

E-mail: vince.lombardi@usdoj.gov

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UNITED STATES ATTORNEY

700 Stewart Street, Suite 5220

Seattle, Washington 98101-1271

CERTIFICATE OF SERVICE (206) 553-7970

CERTIFICATE OF SERVICE

I hereby certify that on October 15, 2007, I electronically filed the foregoing with

the Clerk of Court using the CM/ECF system which will send notification of such filing

to the attorney of record for the defendant. 

 

 s/ Bonnie R. Wolfgram 

 BONNIE R. WOLFGRAM

 Legal Assistant

 United States Attorney’s Office

 700 Stewart Street, Suite 5220

 Seattle, Washington 98101-1271

 Phone: (206) 553-2520

 FAX: (206) 553-0755

 E-mail: bonnie.wolfgram@usdoj.gov

Case 2:05-cr-00381-TSZ Document 207 Filed 10/15/07 Page 9 of 9