Woman Gets Jail Time for Mortgage Elimination Scheme

Linda Sadr, 52, of Manassas, was also ordered to pay more than $9 million in restitution to the victims and her time in jail will be followed by three years of supervised release.

A judge has ruled that a Manassas woman will spend 12 months in prison for her role in a mortgage elimination scheme that caused more than $11 million in losses. 

Linda Sadr, 52,  was also ordered to pay more than $9 million in restitution to the victims and her time in jail will be followed by three years of supervised release, according to the United State's Attorneys office.

United States District Judge Liam O’Grady handed down Sadr' sentence, and the case was prosecuted by the U.S. Attorney's Office.

“Linda Sadr, with guile and greed, stole millions from her clients by promising to eliminate their mortgages,” said U.S. Attorney for the Eastern District  Neil H. MacBride, who made the announcement. 

“After paying off a few mortgages, she convinced hundreds of victims to use a program that only put them in more debt and caused many to lose their most precious material possession, their homes," he added. 

This case was investigated by the FBI’s Washington Field Office.

“During these tough economic times, manipulative people like Ms. Sadr have taken hard-earned money out of the hands of good and honest people,” said James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office. “She took advantage of investors and homeowners, bilking them out of millions of dollars through her complex fraud scheme. The FBI will remain vigilant, investigating illegal financial transactions to identify those involved and holding them accountable for their unscrupulous actions.”


Sadr was indicted by a federal grand jury in Nov. 2010 on two counts of mail fraud, four counts of wire fraud and two counts of money laundering, according to a USAO press release.  She pled guilty to all eight counts of the indictment in January.

Court documents, from 2004 through 2008, obtained by the USAO revealed Sadr marketed a scheme known as a “Mortgage Elimination Program.” 

Here's how it worked: Sadr would allude homeowners to the fact that lenders making refinance loans were operating illegally by bundling the loans for resale and selling them to investment banks, which then used the loans as collateral to borrow additional funds. 

Sadr then fraudulently told homeowners that she and her companies could arrange for the full payment of homeowners’ mortgages by challenging the lenders for their purported illegal actions; threrefore,   eliminating the mortgages on the victims' residences.

In general, the homeowner clients with sufficient equity in their homes who participated in the 'Mortgage Elimination Program' were required to refinance their mortgages with maximum cash-out refinance loans, paying 10 to 15 percent of the proceeds to Sadr or to one of the businesses she controlled.  

Clients were also required to give Sadr the equivalent of 12 to 18 months of advance mortgage payments to be held in “escrow,” an amount that Sadr claimed she would use to pay the refinanced mortgages for the homeowner clients until their mortgages were eliminated, according to the USAO.

Sadr also offered some clients the option of investing equity from their refinance or other monies in exchange for a guaranteed rate of return of 12 to 18 percent.  Sadr guaranteed that the principal on those investments would be refunded at the end of the investment period.

But none of the more than 150 participants in the program received reconveyances on their homes and none received refunds from Sadr for the fees that were paid to her, the release stated.

Some mortgages were eliminated because Sadr repaid the refinance lenders in full by used the monies she obtained from other unsuspecting homeowner clients without their knowledge or consent.

The known homeowner client victim loss from Sadr’s mortgage elimination scheme and related high-yield investment scheme exceeds $11 million.

Assistant United States Attorneys Marla Tusk and Jack Hanly are prosecuting the case on behalf of the United States.

Editor's Note: Information from United States Attorney's Office


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