Feds: Leader of telemarketing fraud scheme sentenced

He was the last one standing. Now, he’s going to federal prison.

Izhak Halbani was the last of 20 defendants and the leader of what federal prosecutors called an extensive real estate telemarketing fraud scheme that cheated investors of more than $19 million.

The scheme lured victims into purchasing residential real estate in Detroit and elsewhere, prosecutors said.

Halbani, 39, of Florida, was sentenced Thursday in U.S. District Court to four years in federal prison, closing out a case that began a decade ago. He pleaded guilty to conspiring to commit mail and wire fraud, prosecutors said in a news release.

The case was filed in 2014; and Halbani entered into a plea agreement the next year, per court records. His sentencing was reset multiple times throughout the years as he cooperated with the government in the case, his Florida attorney, Herbert Cohen, said Friday.

‘Sentence was exceptionally fair’

Cohen said Halbani “realized this is something he should have never done, and he’ll never do again.”

He said Halbani will voluntarily surrender, with a tentative date in early summer when his son graduates from high school. Cohen said District Judge Stephen J. Murphy III was “exceptionally understanding and compassionate” to his client and equally understanding and compassionate to the victims.

“I think the sentence was exceptionally fair,” Cohen said.

Federal prosecutors said Halbani admitted to the scheme, which victimized more than 290 people and involved more than 2,000 properties, causing losses totaling at least $19 million from December 2009 through March

2014, according to the prosecutor’s release and plea agreement.

The plea agreement states that victims were from 46 states and Canada and that Halbani managed the telemarketing scheme’s call center in Florida.

“Not only did the perpetrators of this scheme financially devastate countless victims, but they

also used homes in our community like Monopoly pieces in a game of fraud — callous to the real

impact residential vacancies and blight have on our neighborhoods,” U.S. Attorney Dawn Ison said in the release.

Cohen said Halbani had no prior criminal history and worked in the real estate business in Florida.

He said “to some degree” Halbani was a leader, but Halbani’s brother was involved and other defendants who had histories of schemes climbed onboard. Cohen said Halbani “wasn’t the leader in coming up with the scheme,” but received points against him as an organizer.

How prosecutors say the scheme worked

Halbani and his co-conspirators, using aliases, told victims they were buying bank-owned properties at a fraction of the remaining mortgage balance. The properties then were supposedly “flipped” to hedge funds and foreign investors, generating returns for the victims and inducing them to invest more.

Victims were told the telemarketers didn’t make money on the victims’ initial purchase, only receiving a commission from the resale of the properties, supposedly aligning their incentives with those of the victims, prosecutors said.

But prosecutors said none of that was true.

They said the properties the victims bought were not bankowned, but owned by other entities Halbani and his co-conspirators owned. They purchased the properties for a fraction of what the victims paid, prosecutors said.

They said the telemarketers made money from the victims’ initial purchase. Rather than being resold to third-party hedge funds or foreign investors, the properties were sold to shell entities controlled by the co-conspirators, according to the release.

Victims also were given fraudulent documentation showing purported profits earned on the resale of their properties. Many sent substantial additional sums to the co-conspirators believing there was a ready market for flipping homes to third parties, per the release.

The victims were left owning properties with little value or resale potential, per the release. The plea agreement states the properties’ values were $500 to $1,000 each.

The other defendants were sentenced to a range from one day in prison and two years of supervised release to 10 years in federal prison, prosecutors said.