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Fugitive Held in Home-Loan Scheme Pleads Guilty

Studio City man on the run since 1993 agrees to pay restitution to 26 lending institutions. He also faces a possible prison term and fine.

October 19, 2002|David Rosenzweig | Times Staff Writer

A Studio City man who had been a fugitive for nine years has pleaded guilty to orchestrating a scheme to obtain more than $20 million in fraudulent home loans, the U.S. attorney's office said Friday.

William Lee Cranston, 34, had been on the run since 1993, living under assumed names in Mexico, Florida and Las Vegas.

Apparently confident that he had successfully eluded investigators, Cranston returned to Los Angeles about two years ago.

But last Memorial Day weekend, FBI agents were waiting for him at Los Angeles International Airport when he returned from a holiday trip to Cabo San Lucas, Mexico.

Assistant U.S. Atty. Steven J. Olson said the agents had been tipped off that Cranston was using the name William De Martini.

Cranston, who is being held without bail, faces a possible sentence of up to 6 1/2 years in prison and a $1-million fine when he is sentenced March 3.

Under terms of a plea agreement with prosecutors, he has agreed to pay restitution to 26 lending institutions. Their losses are estimated at $2.4 million to $4.6 million.

Most of the properties were recovered by the banks through foreclosures after the fraud was discovered and Cranston fled the country.

Cranston's lawyer, Alan Baum, said the scam was an outgrowth of a building boom in the Inland Empire in which many developers were under financial pressure to get rid of unsold houses at steep discounts. Cranston, he said, stepped into the breach by creating fictitious buyers.

"But there was never any intent to beat the banks out of their money," Baum said. "The loans were fully collateralized."

From 1990 to 1993, Cranston oversaw the preparation and submission of 89 home mortgage loans totaling more than $20 million, prosecutor Olson said.

The purported borrowers were people paid by Cranston for the use of their names and credit histories. They were not involved in the loan transactions and never lived in the homes that were purchased.

Each application contained fabricated documents, such as pay stubs, bank statements and income tax returns, that Cranston created on a specially designed computer system.

He also created a number of sham employers and investment companies with toll-free telephone numbers that would ring in his office when the lenders tried to verify information on the applications.

To carry out the scheme, Cranston recruited people from throughout the mortgage loan industry.

Nineteen others were previously charged in the case, including loan brokers, bank employees, purported borrowers, an escrow officer, a real estate appraiser and a tax preparer.

Also charged were Cranston's business partner, Tony Leon, and two of their employees. All have either pleaded guilty or been convicted at trial.

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