Loan plot allegations grow - Bank sues to recover lost money, accuses Lincolnwood firm of mortgage-fraud scheme

When officials at a Kansas bank started digging into a bad mortgage loan they made in Chicago in 2004, their lawyers soon saw evidence of what they believed was a scam.

The appraisal for a South Side house was inflated, and the application from the buyer was a phony, the lawyers said.

As they looked deeper, the threads led back to a business address in north suburban Lincolnwood.

In a racketeering lawsuit that America's Mortgage Banc filed to recover the $120,000 it lost when the loan defaulted, the bank alleges that XEZ Inc. and its owner, Brian Urbanowski, orchestrated a mortgage-fraud scheme to rip off the bank. XEZ made $120,000 from the sale of a run-down house in the 5700 block of South LaSalle Street that was worth a fraction of that price, said Scott Kreamer, an attorney for the bank.

The bank was duped, Kreamer said.

"We received a fraudulent loan application," Kreamer said. "We believed the homeowner had the wherewithal to afford the house, and that it was properly appraised."

The allegations in the lawsuit are very similar to a separate set of allegations made last week--by the Cook County state's attorney's office. Prosecutors there charged an alleged member of the Gangster Disciples and a North Side mortgage broker connected to another Urbanowski company, URB Inc., with being the organizers of an ongoing financial crimes enterprise.

URB and a handful of Urbanowski-linked companies are the subject of a widening probe by both the state's attorney and the office of Illinois Atty. Gen. Lisa Madigan.

Urbanowski has not been charged with a crime. His lawyer said Friday that the companies are "cooperating in every way" with the investigation. The lawyer, William E. Meyer Jr., declined to comment on the allegations made against his client.

Appraisals, applications cited

In an application for search warrants in the investigation, prosecutors and Chicago police allege that Urbanowski profited from the multimillion-dollar scheme, which involved an appraiser overvaluing dilapidated properties and mortgage applications that exaggerated home buyers' financial wherewithal.

Investigators searched URB offices in the 7300 block of North Cicero Avenue on Tuesday morning, at about the same time that they arrested Terry Faulkner, 41, of Tinley Park and Rodrigo Navascues, of the 1900 block of North Wood Street in Chicago, on charges related to mortgage fraud.

On Wednesday, investigators searched the stately River Forest home of Gregory Bingham, who runs Pioneer Services, a related company that operates from within the URB offices.

In an interview at his office Thursday, Bingham said investigators took computers and other records from his house. Bingham, who has not been charged with a crime, denied any wrongdoing but acknowledged doing business with Navascues on property deals in the past. He said he could not recall whether he had been involved in any transactions with Faulkner.

Prosecutors allege that Faulkner, a member of the Gangster Disciples, lured unsophisticated home buyers into real estate deals to buy dilapidated properties owned by URB.

A real estate appraiser would appraise the homes at inflated prices, prosecutors said.

Then, Navascues would fill out fraudulent loan applications exaggerating the buyer's financial means, prosecutors said.

Once URB was paid the inflated prices for the properties, the buyers would be left with mortgages they could not pay off, authorities said. When the banks that issued the loans foreclosed, they found themselves with properties worth nowhere near the loan amount, authorities said.

Attorney general investigating

Since 2001, four companies run by Urbanowski have bought and sold more than a thousand Cook County properties, land records show. Urbanowski is president of all four companies: URB, XEZ, SKM Inc. and QRT Inc.

The attorney general's office has "subpoenas out and is in the throes of the investigation" related to more than 50 complaints on Urbanowski-related companies, spokeswoman Cara Smith said. In most of the complaints the state is probing, URB and XEZ allegedly held the title, setting a 90-day deadline for investors to rehab and sell the properties they had bought, Smith said. If the 90 days expired, the investor lost the property but still was stuck with a mortgage, authorities said.

An investment turned sour

In a lawsuit filed last summer against an XEZ-linked real estate agent, Koshy Tvelil alleges that he was the victim of a similar scam. He said he put up cash for his full investment and didn't take out a mortgage and has lost about $130,000. Tvelil, a 62-year-old retired insurance office manager, answered an ad in an Indian-community newspaper claiming he could make thousands of dollars per month investing in property.

On a handshake deal, he invested $250,000 with a real estate agent who dealt with South Side properties owned by XEZ. Tvelil said he felt he could trust the agent because they were from the same ethnic community.

Tvelil is now tangled up in a lawsuit with the agent, Ajit Pillai, over his losses. Tvelil's lawyer, Merle Royce, said his staff has subpoenaed records from XEZ, and they plan to add Urbanowski and the company as defendants in the suit.

Royce also is handling a similar suit against Pillai brought by another man, Thomas Chorath, who met Pillai and his company, Tija Realty, through the Indian community.

Pillai said he bought properties from URB and XEZ, but "otherwise I know nothing about them."

He said Tvelil did not lose money because of any unethical business practices by him or Urbanowski. Pillai said the lawsuit was a result of business disagreements and a slowing real estate market.

Investigators said they were unaware of the lawsuits brought by America's Mortgage Banc and Tvelil. The investigation is ongoing, and authorities said more charges are expected.

"URB and XEZ ... they kind of are very creative. Let me put it like that," Tvelil said. "This was supposed to supplement my pension. Now, I'm running around all the time trying to pay my bills."