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The State

How a bank fell victim to loan fraud

Officials allege a scam used phony appraisals and paperwork to wring millions from deals in the Beverly Hills area.

December 31, 2007|Diane Wedner and Kim Christensen | Times Staff Writers

Like other large investment banks, Lehman has been rocked by rising defaults on loans -- those it made directly and others it sold to investors as mortgage-backed securities. The lender's shares have fallen nearly 20% this year.

Baril, the veteran real estate investor, said the lender should have seen it coming.

"I think the bankers deserve what they got. They were incompetent," he said. "You have to do more than just keep opening the mail and depositing the checks."

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diane.wedner@latimes.com

kim.christensen@latimes.com

Times researcher Scott Wilson contributed to this report.

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(BEGIN TEXT OF INFOBOX)

Extreme home markup

A mortgage fraud ring led by Charles Elliott Fitzgerald and Mark Alan Abrams obtained inflated loans on more than 80 California properties from 2000 to 2003, according to federal prosecutors and a civil suit filed by Lehman Bros. Bank. The map shows more than 50 homes allegedly bought by the ring in Los Angeles County.

Six homes in detail

A mortgage fraud ring led by Charles Elliott Fitzgerald and Mark Alan Abrams obtained inflated loans on more than 80 California properties from 2000 to 2003, according to federal prosecutors and a civil suit filed by Lehman Bros. Bank. The map shows more than 50 homes allegedly bought by the ring in Los Angeles County.

9373 Claircrest Drive,

Los Angeles

Actual price: $850,000

Inflated price: $2.43 million

Loan amount: $1.46 million

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805 N. Alta Drive,

Beverly Hills

Actual price: $2 million

Inflated price: $4.40 million

Loan amount: $2.86 million

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2074 Benedict Canyon Drive, Los Angeles

Actual price: $869,000

Inflated price: $2.45 million

Loan amount: $1.47 million

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9661 Yoakum Drive,

Los Angeles

Actual price: $940,000

Inflated price: $2.49 million

Loan amount: $1.49 million

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9849 Easton Drive,

Los Angeles

Actual price: $799,000

Inflated price: $2.49 million

Loan amount: $1.49 million

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2155 Roscomare Road,

Bel Air

Actual price: $735,000

Inflated price: $2.37 million

Loan amount: $1.42 million

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The defendants

The U.S. attorney's office in Los Angeles has charged 10 people in an alleged scheme to obtain $142 million in fraudulent mortgage loans. They are:

Mark Alan Abrams,

46, real estate developer

Charges: Conspiracy, bank fraud, false statement on tax return, obstruction of justice

Status: Pleaded guilty, awaiting sentencing

Charles Elliott Fitzgerald, 47, real estate developer

Charges: Conspiracy, bank fraud, loan fraud, continuing financial crimes enterprise, money laundering, obstruction of justice

Status: Pleaded not guilty; awaiting trial

Joseph Babajian,

54, real estate agent

Charges: Conspiracy, bank fraud, loan fraud, money laundering

Status: Pleaded not guilty; awaiting trial

Kyle Grasso,

36, real estate agent

Charges: Conspiracy, bank fraud, loan fraud, money laundering

Status: Pleaded not guilty; awaiting trial

Lila Rizk,

41, appraiser

Charges: Conspiracy, bank fraud, loan fraud

Status: Pleaded not guilty; awaiting trial

Scott Robinson,

45, appraiser

Charges: Conspiracy, bank fraud, loan fraud

Status: Pleaded not guilty; awaiting trial

Nicole LaViolette,

38, loan processor

Charges: Conspiracy, wire fraud

Status: Pleaded guilty; awaiting sentencing

Jamieson Matykowski,

34, real estate worker

Charges: Conspiracy, wire fraud

Status: Pleaded guilty; awaiting sentencing

Timothy Holland,

36, escrow officer

Charges: Conspiracy, wire fraud

Status: Pleaded guilty; awaiting sentencing

Richard Maize,

54, mortgage banker

Charges: Conspiracy, bank fraud, false statement on tax return

Status: Pleaded guilty; awaiting sentencing

Source: Justice Department

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