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CRE Investor Admits To $150M Fraud After Laundering Cash Through Crypto, Fleeing Country


“The whole point of fraud is that there’s some sort of concealment,” notes Bonnie Hochman Rothell, Partner. “With a clever fraudster, it might not be so obvious. Despite really diligent underwriting, a lot of lenders will miss something because they, too, have been defrauded.”

Hochman Rothell is referencing the multimillion-dollar fraud scheme of businessman Raheel Bhai. Bhai, head of Addison-based IBF Properties and IBF Hospitality, recently pled guilty to one count of wire fraud after falsifying and forging documents to obtain a multi-million dollar loan from New York-based lender Benefit Street Partners. She recently spoke to Bisnow about the case and the implications for the lender defrauded in the scheme while also under scrutiny for underwriting the loan.

Hochman Rothell stated that Benefit Street is not the only lender to come under fire in recent years for failing to catch fraudulent activity committed on the part of developers or investors. “Every time there is a default, particularly where there has been a loan default close in time to the loan having been underwritten, I find regulators are going back and scrutinizing the lenders. That has become more commonplace today.”

In the aftermath of prior recessions, more stringent protocols were implemented to ensure lenders do their due diligence during the underwriting process, which leads Hochman Rothell to believe Benefit Street did everything by the book and was defrauded by no fault of its own.

“Trust but verify,” she said. “The underwriting team needs to get their feet on the ground … sometimes you can catch an overstatement or a misrepresentation by actually seeing it. Don’t trust somebody’s projection, get a second appraisal if there’s something that smells in a first appraisal, and lots of communication, lots of documentation.”

Please contact Bonnie Hochman Rothell for any questions regarding this article or for information regarding best practices on avoiding and, when inevitable, addressing borrower fraud.

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