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2 Plead Guilty to Real Estate Fraud Involving Valley Parcels

August 12, 1986|JANE APPLEGATE | Times Staff Writer

Two Orange County businessmen pleaded guilty Monday to a real estate fraud that used inflated appraisals and false documentation on two parcels of land in the San Fernando Valley area to get $21 million from a consortium of banks.

At a federal court hearing, John (Skip) Chodak, 43, of Laguna Hills pleaded guilty to six counts of wire fraud and one count of interstate transportation of funds obtained by fraud.

Earlier in the day, another man, James Michael Fairbanks, 28, of Anaheim pleaded guilty to three counts of wire fraud for his role in the scheme.

Chodak and Fairbanks are among nine men accused of setting up a network of shell corporations to borrow $14 million from more than two dozen banks and savings-and-loan associations across the country to purchase and develop property in Chatsworth, and to borrow $7 million to build a hotel in Newhall, according to a federal indictment handed down in May.

However, the defendants pocketed most of the money and never repaid the banks, according to the indictment.

As part of their plea bargain, Chodak and Fairbanks agreed to cooperate with government prosecutors working on the case. Prosecutors in turn agreed to drop some of the charges against Chodak and not to file additional charges against Fairbanks. The case stemmed from a joint investigation by the Orange County district attorney's office, the state attorney general's office, the FBI and the U. S. attorney's office.

Chodak faces a maximum federal prison sentence of 40 years and fines of $16,000. Fairbanks faces a maximum sentence of 15 years and $3,000 in fines.

U. S. District Judge Harry L. Hupp told both men that he may also order them to repay the banks, which lost millions of dollars on the fraudulent transactions.

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