Gang of four leaves banks, watchdog red-faced in $110m home loan scam

FROM an office in suburban Melbourne, four people are accused of cooking up one of Australia’s largest-ever home loan scams.

Fraud accused Najam Shah arrives home in Melbourne. Picture: David Geraghty

FROM an unassuming office in the Melbourne suburb of Footscray, four people are accused of cooking up one of Australia’s largest ever home loan scams — one that has left the corporate watchdog and the country’s largest banks red-faced over the scheme that wrested at least $110 million from financial institutions.

Yet, unlike other alleged frauds, there were no retail investor victims. Those stung were 12 of Australia’s proudest financial institutions, including the big four banks, who were allegedly taken in by a raft of fake documentation.

As a result of the alleged scam, up to 600 people were able to get a home loan for which they would not otherwise have been able to qualify. For the alleged conspirators, the reward was millions of dollars reaped from commissions on the loans plus cash fees received for ­allegedly manufacturing the dodgy documents underpinning the scheme.

It is now clear there is more to this story than the Australian Securities & Investments Commission, which had been investigating the group since 2011, was willing to reveal.

Over the past decade, a group of people tied to the alleged fraud ring left behind a trail of disappointed creditors and had legal run-ins with everyone from National Australia Bank and Department of Immigration to the Australian Taxation Office.

But until Tuesday, one of the men charged with conspiracy to defraud, Aizaz Hassan, was still working as a mortgage broker because ASIC had not cancelled his credit licence.

Rajesh Narad, who has close business links to the group but is not accused of doing anything wrong, is also a mortgage broker with Loan Market. A Loan Market spokeswoman said Mr Narad is suspended pending an internal investigation.

While ASIC crowed in a press release that it had brought conspiracy to defraud charges against two men — Hassan and the twice-bankrupted Najam Shah — at the centre of the alleged scam, it has since emerged that another key suspect left Australia two days after his property was raided by Federal Police.

It has also emerged that ASIC only investigated only 350 loans, rather than the 600 it originally identified as suspect.

Mr Shah’s partner, Manija Zayee, was also charged with obtaining property by deception.

She was the sole director of Myra Financial Services, the Whitehall Street, Footscray company at the centre of the alleged scam between August 2008 and December 2011. It was in December 2011 that the AFP raided properties across Melbourne, seizing documents and computers.

The fourth person, Mohammed Radhi Maki Ebrahim Ahmed Hamood, left Australia for Bahrain two days after the AFP searched his Lyndhurst home. ASIC did not apply to secure Mr Hamood’s passport after the raids on his property that uncovered computers with evidence he had doctored documents used to support home loans.

It also did not apply to secure the passports of Mr Shah, Ms Zayee and Mr Hassan until they were charged on January 2.

Mr Shah and Ms Zayee also left Australia during the investigation in 2011, although they returned in me to face ASIC’s charges. But the story of Ms Zayee and Mr Shah started much earlier.

In 1991, Afghan-born Ms Zayee arrived in Australia as a 15-year-old refugee from Pakistan with her parents and four siblings.

The family lived in a hostel in Springvale in Melbourne’s outer east. She attended an English language school for one year and after that attended Westhall High School for Year 9 and Springvale High School for half of Year 10 before dropping out.

In 1994, at 18, she met the then 35-year-old Najam Shah, a Melbourne man born in Pakistan who would later become her de facto partner and the father of her three children.

By 1995, Ms Zayee and Mr Shah, who was then using the name Najim Sayed Zaidi, were company directors of Oz Pak, a now defunct company based in Dandenong that is not linked to the alleged home loan fraud.

However, Ms Zayee and Mr Shah’s relationship fell apart soon after, according to an affidavit Ms Zayee filed in the County Court during the investigation.

In 2003, Ms Zayee married a Shazhad Baig who then became stepfather to at least two of Mr Shah’s children with Ms Zayee. Ms Zayee told the court the pair divorced after six months and she had then rekindled her relationship with Mr Shah.

Mr Baig could not be found and it is unclear whether Mr Shah and Mr Baig are different people.

The case is marked by the dizzying array of names used by Mr Shah and Ms Zayee: each has used at least five in the course of their business careers. What is clear is that by 2003, Mr Shah was made bankrupt over unpaid debts in NSW. That bankruptcy lasted for a period of five years.

In 2006, Ms Zayee made what appears to be her first foray into the mortgage arranging business as a director of Easy Home & Loans and Future Property Concepts. Both companies are based at 30-36 Irving Street, Footscray, which is now an Indian restaurant.

At both companies she counted Mr Narad as a co-director. Also a director at Future Property Concepts was mystery man Giovanni Salvatore (John) Chiaramonte.

The Australian could not locate Mr Chiaramonte, but in September 2010 a man bearing that name was described as the “new manager” at a different Indian restaurant, Gharana, in Albert Park — a business name that belonged to Future Property Concepts.

Mr Narad and his company, Rajuma, which traded as Easy Home Loans, were previously at the centre of an alleged $22.7m residency visa fraud against National Australia Bank. Mr Narad settled the matter out of court and it did not result in an ASIC investigation.

Mr Narad this week repeatedly denied knowing Ms Zayee, although forms used to establish Easy Home & Loans in 2006 allegedly include his current mobile phone number and a signature that appears to be the same as that on his personal insolvency agreement.

Court records show NAB settled the matter with Mr Narad for a little over $500,000 and that it had also seized a bank account containing almost $5m that purportedly came in the most part from commissions paid by his clients as part of the alleged residency visa scam.

In her affidavit, Ms Zayee made no mention of Mr Narad and The Australian is not alleging he committed any crime or that he is involved in the alleged home loan scam.

Mr Narad again appeared before the court in 2013, sued by the tax office for more than $500,000 in taxes and penalties after it investigated his income in 2007 and 2008 and decided it had been underpaid by hundreds of thousands of dollars.

He initially denied owing any money but in January last year, after he failed to file a full defence, the Victorian Supreme Court found the ATO was entitled to collect more than $570,000. He entered his personal insolvency agreement in June, avoiding bankruptcy by paying $100,000 to settle with creditors, including the ATO, who were owed a total of about $1.3m — less than 10c in the dollar.

Meanwhile, Ms Zayee confirmed in court documents that she was a director of Future Property Concepts and said she and Mr Chiaramonte had a business selling house and land packages to clients of Myra on behalf of a range of home builders that included Devine Homes.

This week a former executive of Devine Homes, Creation Homes managing director Luke Hartman, said he remembered Mr Narad, Mr Chiaramonte and Ms Zayee but thought they had only worked with Devine for a short period of time. Devine, which is now under new management, could find no evidence of any relationship with Future Property Concepts in its files.

In 2012, after being raided by the Australian Federal Police, Ms Zayee resigned as a company director of Future Property Concepts, writing on her resignation form filed with ASIC:

“Dear John, I am not comfortable or satisfied with the conduct of the company, ie, Future Property Concepts, therefore I would like to submit my resignation from the duty of directorship as of 08/02/2012 effective immediately.”

An affidavit filed in the County Court proceeding by Victoria Police detective Anthony Beach showed investigators believed Mr Hamood helped Ms Zayee obtain a 2008 home loan from CBA by doctoring payslips from Oracle.

She never worked there, an ­Oracle senior human resources manager told ASIC. The HR manager told ASIC that “the form, layout and content” of the payslips were “not consistent with the form and layout of pay advices ever produced by Oracle”.

Ms Zayee also claimed in her affidavit that Mr Shah had a business relationship with a CBA employee and Myra received commissions from the employee for referring clients on to him.

CBA is investigating the employee, who it is believed ran a mobile lending service in Footscray. The bank and the others involved — including ANZ, NAB and Westpac — are sifting through the hundreds of allegedly suspect home loans drawn up by Mr Hassan on behalf of Myra clients.

It is understood that ASIC does not plan to bring any charges against the clients of Myra who obtained home loans based on doctored information. It would be left to the banks to recover these loans if they so choose.

While the criminal charges imply false documents were produced on an industrial scale, ASIC is not investigating the hundreds of other suspect loans allegedly written by the cabal because it feels doing so would be time and resource intensive and it would not result in a worthwhile increase in possible criminal penalties.

The matter again highlights the perils of the incentive models used by banks with their own employees and commission-based payments to brokers who bring in new business for the banks.

The same incentives and commissions have been linked to a raft of other scandals at the banks including Storm Financial, Timbercorp, Great Southern and the financial planning controversy at CBA and Macquarie Bank.

This week, senator Sam Dastyari told The Australian he would be calling ASIC to appear in front of the powerful Senate Economics Committee next month to explain why it had not cracked down on the alleged rogue mortgage brokers at the centre of what is believed to be Australia’s single biggest home loan swindle. “This is outrageous,” Senator Dastyari said. “It is once again a demonstration of ASIC failing to act when all the evidence is before them.

“For those of us who have increasingly lost faith in ASIC’s ability to be the tough cop on the beat, situations like this reinforce the view, as (ASIC chairman) Greg Medcraft said, that Australia is becoming a paradise for white collar criminals. There is this constant failure to act.”

Meanwhile, ASIC has gone into full damage control, defending the conduct of the investigation and slamming “inaccurate and speculative” press reports.

“It has necessarily been a long, complex and at times extremely sensitive operation,” ASIC said. “There are some important parts of the investigation which we are not able to divulge.”

Ms Zayee is to appear at Melbourne Magistrates Court on January 27. Mr Hassan and Mr Shah are on bail and are due to reappear before the magistrate on April 17.

Do you know more? Contact danckerts @theaustralian.com.au or   [e-mail]