An Elk Grove police officer allegedly lied on his mortgage and refinance applications to obtain loans with cash equity totaling tens of thousands of dollars, according to an affidavit in Sacramento's federal court.
Hidayatullah Ali Khalil, 29, a three-year veteran of the police department, was among three people who appeared Thursday before U.S. Magistrate Judge Gregory G. Hollows on felony charges of mortgage-related fraud.
His brother, Amanullah Khalil, and sister-in-law, Muzdha Khalil, were accused of a separate "equity stripping mortgage fraud scheme," according to court documents.
All three entered not guilty pleas and are free on $75,000 unsecured bonds each, according to their defense attorneys.
None of the allegations against Ali Khalil was related to the officer's duties as an Elk Grove police officer, according to the department. Khalil has been placed on paid administrative leave pending the outcome of an internal investigation.
Ali Khalil's lawyer, Tom Johnson, said his client has been a peace officer for six years, previously serving as a deputy with the Santa Cruz County Sheriff's Department.
"My client maintains he has committed no crimes whatsoever," Johnson said. "He's distinguished himself as a peace officer."
According to the affidavit, Ali Khalil bought two residential homes – one on Jillson Way in Elk Grove in April 2005, and another on Paseo Drive in Watsonville in September 2005.
He refinanced each of the properties twice within months of the original closings. The affidavit states that he inflated his income in the four transactions, sometimes saying that he earned more than twice his actual salary.
He allegedly listed each property as his primary residence and failed to disclose that he owned the other property. Authorities said in the affidavit that his false statements "made qualifying for the refinancing easier, and was material to the bank in approving the loan application."
On one occasion, Ali Khalil was able to obtain $14,000 in cash from the refinancing and on another occasion, $90,256. He transferred a portion of the money to his brother, Amanullah Khalil, the affidavit states.
Both homes had gone into foreclosure by 2008.
Ali Khalil later told investigators during an interview in May that he had never lived in the house on Jillson Way, the affidavit states.
"Mortgage fraud continues to be a significant crime for our region, and we are committed to vigorously investigate cases such as this one," said Steve Dupre, Sacramento FBI spokesman.
In a separate affidavit, authorities allege that Amanullah and Muzdha Khalil defrauded the bank of about $427,000 by exaggerating their income on loan applications.
Defense lawyer William Portanova, who is representing Amanullah Khalil, said outside the courtroom that he had not seen any of the evidence.
"What appears to be a simple mistake when the real estate market is hot is a mistake," Portanova said. "When the real estate market crashes, a mistake can look like a crime."
Call The Bee's Chelsea Phua, (916) 321-1132.
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