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Mug Shot Monday – Why Let the Facts Get in the Way of a Good Loan Application?

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September 22, 2014

By Bob Coleman
Editor, Coleman Report

SmallBusinessLoanApplicationThought Selim Zherka says the feds.

According to his Indictment, from November 2005 through 2008, Zherka obtained loans totaling more than $146 million in loans from three banks – North Fork Bank (now Capital One), Sovereign Bank (now Santander), and Signature Bank – for the purchase and/or refinancing of apartment house complexes in New England, Tennessee, New Jersey, and New York by lying about the purchase prices of the real estate he was acquiring, the amount of the down payments he was making toward the purchases in question, his assets, his income, his tax returns, and the nature and circumstances of a 2000 court judgment against him for assault and breach of contract (which, to date, he has not paid).

Additionally, the Indictment charges Zherka with engaging in a decade-long tax fraud scheme. The Indictment alleges that Zherka repeatedly submitted fraudulent tax returns to the IRS that overstated depreciation expenses and understated his capital gains on tax returns for the real estate holding companies in which he was a partner and which, in turn, owned the above apartment house complexes, thereby reducing their tax liabilities. The Indictment also charges that Zherka obstructed the IRS by, among other means, failing to file personal tax returns for over a decade.

Finally, the Indictment charges Zherka with tampering with witnesses in this investigation.

U.S. Attorney Bharara stated: “Selim Zherka, while running his various businesses, allegedly engaged in a string of crimes. Zherka, the owner of commercial real estate and other businesses, stands accused of filing multiple false bank loan applications, engaging in tax fraud, and witness tampering. He is also charged with defrauding a businessman of his right to collect a court judgment against Zherka for assault and breach of contract.”

If convicted on the charges in the Indictment, Zherka faces the following maximum penalties: for each of the 11 counts of submitting a false loan application with which he is charged, 30 years in prison and a $1 million fine or twice the gross gain or loss resulting from the crime; for the count of wire fraud and the count of witness tampering, 20 years in prison and a $250,000 fine or twice the gross gain or loss resulting from the crime on each count; for the count of conspiracy to obstruct the IRS and violate tax laws, five years in prison and a $250,000 fine or twice the gain or loss resulting from the crime; and for each of the 10 counts of making/subscribing to false returns, the 10 counts of aiding/assisting in the preparation of false tax returns, and the count of attempting to interfere with the administration Internal Revenue laws, three years in prison and a $250,000 fine or twice the gross gain or loss resulting from the crime.

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