FAIRFIELD — The president of Discovery Sales Inc. was arrested Monday after being indicted for his role in an alleged mortgage fraud scheme that authorities say cost lenders more than $150 million.
Ayman Shahid, 38, of Danville, was indicted May 15 by a federal grand jury in Oakland. The indictment was unsealed after his arrest in Concord.
Shahid pleaded not guilty on Monday in federal court in Oakland to conspiracy to commit bank fraud and 17 bank fraud counts, the Contra Costa Times reported.
Shahid’s attorney, Jim Brosnahan, said the case against his client was “very weak.”
“The case never should have been brought,” he told the Contra Costa Times. “And when we get to court, the evidence will prove it.”
Shahid faces allegations of conspiracy to commit bank fraud and 17 individual counts of bank fraud in connection with homes sales between November 2006 and October 2008 in Contra Costa and Alameda counties.
Discovery Sales, with headquarters in Concord, sold homes built by Discovery Builders and the Albert D. Seeno Construction Co.
Authorities suspect that Shahid masterminded a scheme to have banks approve mortgage loans for unqualified buyers at the height of the financial crisis. The alleged scheme included paying undisclosed incentives to unqualified homebuyers, and then hiding those incentives from appraisers and bank underwriters so the loans would get approved, according to the indictment.
Home purchases involved in the alleged scheme sold for a combined $230 million. The banks that backed those loans lost $150 million when homes went into foreclosure or were subject to short sales, according to federal authorities.
This is the second high-profile arrest in as many years for the allied companies.
A sales director for Discovery Builders and the Albert D. Seeno Construction Co. surrendered to federal authorities in February 2012, two years after federal authorities raided the companies’ Concord offices.
She was suspected of participating in a fraud scheme that allegedly sought to inflate the value of four homes in August 2008 in a struggling Pittsburg development that was owned by her employer.
Allegations in that case are similar to those described in the May 15 indictment of Shahid.
Various Seeno companies have a long history in Solano County. They have built more than 15 developments over the years, including Cordelia Villages, Southbrook and Collection at Paradise Crest in Fairfield, Heritage Park and Laurel Creek in Suisun City and North Village and Westgate in Vacaville.
Discovery Builders at some point plans to build the Fieldcrest subdivision and the Villas at Havenhill apartments in Fairfield. The company has submitted new home plans for The Cottages of Fairfield project near Veterans Neighborhood Park. The Seeno Company submitted plans in February for a second phase of Gold Hill Village near Interstate 680 and Gold Hill Road.
The Associated Press contributed to this report. Reach Glen Faison at 427-6925 or [email protected] Follow him on Twitter at www.twitter.com/GlenFaison.