Opinion ID: 2791321
Heading Depth: 2
Heading Rank: 3

Heading: Standard Federal Bank Fraud (Count 7)

Text: In March 2004, co-defendant Farouk Harajli obtained a $3 million loan from Standard Federal. Because part of this loan was secured by a gas station he owned, he promised not to obtain any secondary financing on that property or borrow any additional funds without Standard Federal’s consent. Later that spring, Harajli was involved in a contested divorce and turned to Nazzal for a short-term $100,000 loan. Because Harajli’s wife co-owned most of his businesses, the court required her consent for all financial transactions—but she refused to sign off on the loan from Nazzal. To solve this problem, Nazzal proposed to falsify a Power of Attorney permitting Harajli to sign various business documents on his wife’s behalf. Schneider prepared the document, Harajli forged his wife’s signature, and Nazzal loaned him the $100,000. When Harajli approached Nazzal for another loan, Nazzal performed a title search on Harajli’s properties and discovered that Standard Federal had not recorded its $3 million -5- Case Nos. 13-2612 / 13-2628 United States v. Nazzal / Schneider mortgage on the gas station.2 Nazzal then took steps to drain the equity from the property by recording two bogus mortgages totaling $750,000. Schneider prepared both documents, which were notarized by his wife. Harajli eventually defaulted on his $3 million loan from Standard Federal. When Nazzal falsely claimed to have no knowledge of this loan, Standard Federal was forced to file an action to quiet title. Under Michigan’s recording statute, any prior knowledge of Standard Federal’s mortgage would have been fatal to Nazzal’s claim to be first in line on the property.3 Nazzal therefore testified falsely—and also arranged for Harajli to testify falsely—that he had no knowledge of this pre-existing mortgage. In a further effort to make his claims seem legitimate, Nazzal arranged for co-defendant Carey of Minnesota Title Agency to backdate a check showing Nazzal’s “prior” acquisition of a title insurance policy with respect to his bogus mortgages. Nazzal also encouraged Carey to testify falsely to the same during a deposition and at trial. Nazzal eventually prevailed in the quiet title suit and was awarded $750,000— undoubtedly due to the perjured testimony. Between paying the judgment and attorney’s fees, Standard Federal Bank (by then Bank of America) and its commercial title company lost nearly $1 million.