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Friday, May 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Texas Real Estate Cheats Going to Prison

DALLAS (CN) - Two Texas real estate developers got multiyear prison terms for running off with $33 million from $39 million in construction loans.

Anirudh Sarwal, 39, was sentenced to 57 months in federal prison and Fred Alden Yeo, 51, to 42 months, the U.S. Attorney's Office said. Both are from Austin.

Sarwal, head of East Avenue Office Holdings, was guarantor on the loan and Yeo was co-guarantor.

They also were ordered to pay $13.5 million in restitution to U.S. Bank and Texas Capital Bank.

Both pleaded guilty to conspiracy to commit bank fraud.

They began negotiating with both banks in August 2008 to fund construction of an eight-story office building next to Interstate 35 in Austin.

"Sarwal and Yeo knowingly submitted a fabricated bank statement to U.S. Bank and Capital Bank in or around November or December 2008 purporting to show that Sarwal had more than $7 million in an investment account at Wells Fargo," according to the criminal information.

"Sarwal and Yeo submitted this bank statement knowing that both financial institutions wanted assurance that Sarwal, as co-guarantor on the loan, and Yeo, also a co-guarantor on the loan, collectively had at least $5 million in liquid assets at their disposal. In reality, no such Wells Fargo investment account existed, and the bank statement was a forgery."

To get the $39 million loan, Sarwal produced a forged bank statement that showed he had $7 million in a Wells Fargo account that did not exist, according to the information.

The loan was approved on Dec. 30, 2008, and by the time the banks foreclosed on it, in June 2010, "Sarwal and Yeo [had] made more than $33 million in draws on construction loan," according to the information.

At sentencing, prosecutors produced evidence that the men claimed that 53 percent of the office space had been leased, though only 12 percent had been leased to legitimate tenants.

"The fraud continued throughout the project, with both Sarwal and Yeo submitting fake invoices to justify large draws from the construction loan and by taking steps to obtain fake cell phone numbers for the nonexistent tenants," prosecutors said in a statement.

Both men must report to prison on June 4.

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