Baltimore, Maryland – Rebecca Marie Cohn, aka Rebecca Marie Stanton, 38, of Fallston, Maryland, pled guilty in federal court to knowingly and willfully making false statements to financial institutions in connection with real-estate settlements.
Kelly O. Hayes, U.S. Attorney for the District of Maryland, announced the guilty plea with Special Agent in Charge Robert Manchak, Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), and Special Agent in Charge Jeffrey D. Pittano, Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG), Mid-Atlantic Region.
From 2013 through 2019, Cohn worked as a settlement and title processor for Residential Title & Escrow Company, a real estate title company located in Owings Mills, Maryland. As part of her job handling real estate property settlements, Cohn created, reviewed, and submitted HUD-1 Settlement Statements to financial institutions. Cohn was also responsible for documenting incoming funds and disbursements in connection with real-estate closings, along with providing financial institutions with documentation of equity injections utilized in real-estate transactions.
At Residential, Cohn engaged in settlement work in connection with co-defendants Mehul Ramesh Khatiwala, aka “Mike Khatiwala,” 43, of Voorhees, New Jersey, Rajendra G. Parikh, 64, of Monroe, New Jersey, Jennifer H. Watkins, 48, of Marlton, New Jersey, and entities associated with them. Khatiwala, Parikh, and Watkins recently pled guilty to a conspiracy to obtain loan proceeds to buy and sell hotels in connection with a hotel-flipping scheme.
“Flipping” is a real-estate investment strategy that involves purchasing property to hold for a short period before selling it to make a quick profit. Khatiwala, Parikh, and Watkins created limited liability companies with no significant business activity (“shell entities” or “selling entities”) to purchase hotel properties. They then created a second company to purchase the hotels from the shell companies at substantially higher prices. Cohn performed settlement work for the second part of the flip transaction.
Khatiwala, Parikh, and Watkins sought loans for those transactions through the SBA’s Section 7(a) Program, which guaranteed and insured approximately 75-85 percent of these loans, and required that the small business owner/borrower invest a certain amount of their own money into the business to qualify for the loan.
From June 2019 until August 2019, Cohn worked with Khatiwala, Watkins, and Parikh, handling settlement transactions that she knew the information represented on the HUD-1 Settlement Statements was materially false. Cohn also made false statements to financial institutions by sending them information about buyers’ equity injections in the form of checks, bank records, and other documents.
Through these false statements Cohn claimed to show that various equity injections occurred, knowing that those funds had already been represented as used for a previous real-estate hotel settlement. Cohn knew that the financial institutions relied on the false statements to decide to extend the loans to the borrowing entities.
On July 23, 2019, Cohn knowingly submitted a materially false HUD-1 Settlement Statement in connection with an SBA guaranteed loan to North State Bank. The statement substantially overrepresented the deposit or earnest money that the borrowing entity actually utilized in the transaction.
Additionally, in the statement she provided for the loan settlement, she falsely claimed that the settlement took place on July 23, 2019. But the settlement could not have taken place on that date because the selling entity did not own the hotel until July 24, 2019. Cohn knew that the selling entity did not own the hotel on July 23, 2019, as she used the loan proceeds provided by North State Bank to help the selling entity purchase the hotel.
Cohn is facing a maximum sentence of 30 years in federal prison for making false statements to a financial institution. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge determines sentencing after considering the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Hayes commended the FHFA-OIG and FDIC-OIG for their work in the investigation. Ms. Hayes also thanked Assistant U.S. Attorneys Harry M. Gruber, Evelyn L. Cusson, and Ari D. Evans, who are prosecuting the federal case, and recognized Paralegal Specialists Joanna B.N. Huber and Zharde Todman.
For more information about the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.