Two Defendants Convicted of Mortgage Fraud for One Rincon Hill Properties Valued at $5.5 Million

September 20, 2012

CONTACT: Stephanie Ong Stillman, DA Gascón’s Office, (415) 553-1167
ADA Alex Bastian, DA Gascón’s Office, (415) 553-1931

Conspiracy Involved Assumed Identities, Forged Documents, and Transferred Properties

San Francisco, CA – District Attorney George Gascón announced today that after a six month trial Winston Lum, age 48 and Jay Shah, age 48, were found guilty of multiple felonies including money laundering, conspiracy and grand theft. Lum and Shah are two of five defendants who devised a sophisticated scheme to transfer a woman’s three condominiums at One Rincon Hill, orchestrate a $2.2 Million dollar illegal loan against the property, and money laundering.

“This case illustrates the depths to which scam artists can devise a sophisticated scheme to defraud unsuspecting victims of millions of dollars,” said District Attorney George Gascón. “The guilty verdicts send a message that white collar crime continues to be a top priority for my office. This year, our Mortgage and Investment Unit has successfully prosecuted nine defendants responsible for defrauding over 45 victims out of over $5.5 million.”

The Defendants who were charged in this case are identified as:

Jay Shah, age 48, was charged with 13 felony counts, including grand theft, money laundering, forgery, filing forged documents, and conspiracy. He was found guilty on all charges. He faces additional jail time for under California’s Aggravated White Collar Crime Enhancement. He faces over 35 years in state prison. Shah posted $7.5 Million bail and failed to appear for the verdict. His whereabouts are currently unknown and he is considered a fugitive from justice.

Winston Lum, age 48, was charged with 15 felony counts including grand theft, identity theft, procuring or offering false or forged instruments for record, filing of false or forged documents related to single-family residences, attempted grand theft. He was found guilty of 6 felony counts of filing false documents and grand theft. He faces additional jail time for under California’s Aggravated White Collar Crime Enhancement.

Melvin Emerich, age 60, was charged with 8 felony counts, including money laundering, conspiracy, and grand theft. He has also been charged under California’s Aggravated White Collar Crime Enhancement. The jury hung on the conspiracy charge, money laundering, and grand theft. He was found not guilty of filing false documents. His next court date is October 25 to set a new jury trial.

Kaushal Niroula, age 31, was charged with 15 felony counts, including grand theft, money laundering, forgery, filing forged documents, and conspiracy. He has also been charged under California’s Aggravated White Collar Crime Enhancement. He is in custody in Riverside County, but was served in jail with a $7.5 million warrant. He was found guilty of murder in Riverside County and is looking at a life sentence.

(A fifth defendant Grachelle C. Languban is still an outstanding fugitive in this case and is reported to have fled to the Philippines).

The Scam

5 co-conspirators (Winston Lum, Melvin Emerich, Jay Shah, Kaushal Nirouda and Grachelle C. Languban) were charged with a conspiracy involving the fraudulent transfer of a woman’s three condominiums at One Rincon Hill, illegal loans taken against that property, and money laundering. The involved conspiracy involved three San Francisco luxury condos valued at $5.5 million. The defendants fraudulently put the properties into a conspirator’s name, quickly took out loans against the properties, drained the properties of their equity and then laundered the proceeds through shell companies. When the victim checked with the city’s Assessor-Recorder, the deal was already done.

Confidence Scheme/Impersonations

The scheme also involved an elaborate series of “confidence man”-type tricks and impersonations. Mr. Niroula and Mr. Lum impersonated a series of characters to get inside One Rincon Hill, get the keys to the units, and convince the bank that they were the owners.

To get the keys to the three condos, Mr. Niroula contacted realtors and claimed to be a wealthy investor named “Syd Jones” who was interested in renting a condo at One Rincon Hill. When the lender insisted on meeting Mr. Lum and seeing the condos themselves before making any loans, “Syd Jones” contacted the realtors and offered to buy the condos, but he needed the keys to view them by himself. With keys hand, Mr. Niroula and Mr. Lum met with the lender. Mr. Lum posed as the owner, claiming to be a retired foreign tennis pro who received the properties as a gift from his wealthy aunt, Ms. Hwang. Mr. Niroula played his advisor and translator, “Joshua Beam,” since Mr. Lum’s character pretended to speak poor English. The impersonations worked and the loan was approved for $2.2 million.

Follow the Money

As Lum and Niroula duped the lenders, Mr. Shah was arranging financing and escrow services through his extensive business contacts to handle the anticipated loan. Mr. Shah and his attorney, Mr. Emerich, then gave instructions on how to distribute the loan proceeds. The initial investigation revealed that most of the $2.2 million in loan money was allegedly paid either to a Nevada company and deposited into a confidential Swiss bank account.

Coordinated, Multi-Agency Raids

Raids were conducted simultaneously in six locations in four counties by more than 50 agents representing from seven law enforcement agencies in Northern California, including the San Francisco Police Department, San Francisco District Attorney’s Office, San Jose Police Department’s MERGE Team (Mobile emergency Response Group and Equipment), computer and digital search and seizure specialists from the R.E.A.C.T. Task Force, Santa Clara County Sheriff, Santa Cruz Police Department, and the Los Altos Police Department.

“The Dark Prince” (Riverside County Murder Conviction Discussion)

The arrest warrant was served on Mr. Niroula in Riverside County, California, where he was facing murder charges. Mr. Niroula conspired to murder a 74-year-old victim, fraudulently took title to the victim’s home, and then attempted to sell it. On March 2, 2009, Mr. Niroula was arrested on a no-bail murder warrant as he was entering Department 20 of the San Francisco Superior court, where he was due to face charges on a separate fraud case. Mr. Niroula also has a pending case in Marin County in which he allegedly stole approximately $300,000 of jewelry from a 78-year-old Novato woman.

Mr. Niroula has been the subject of significant public attention in San Francisco for his alleged role in the demise of New College and for his role in the Riverside County murder case, for which he was given the name, “The Dark Prince.” Mr. Niroula has since been convicted of murder in Riverside County and is awaiting sentencing.