In the follow-up to its story about Beverly Hills real estate agents conspiring to defraud banks by securing loans on properties whose values they helped inflate, the Los Angeles Times today published “How a Bank Fell Victim to Loan Fraud”.
At the center of the conspiracy is Mark Alan Abrams, 46 , an L.A. area businessman and Charles Elliott Fitzgerald, 47, his developer partner and a bigamist who fled the U.S. but was captured in Samoa and returned to this country to face federal prosecution. They were assisted by Prudential California real estate agent Joseph Babajian, 54, and his partner Kyle Grasso, 36, who helped Abrams and Fitzgerald purchase Westside homes for market value, then, with the aid of appraisers who grossly inflated the properties’ values and re-sold them to “straw buyers”, who had sold the use of their names and credit to round out the scheme.
Also indicted besides the four (4) above, were appraisers Lila Rizk, 40, Trabuco Canyon, and Scott Robinson, 44, Dana Point. Other than Abrams, who has pleaded guilty and is awaiting sentencing, the rest have pleaded not guilty.
All of the above were charged with conspiracy, bank fraud, and loan fraud (and a few other crimes). Babajian and Grasso were also charged with money laundering.
The following co-conspirators pleaded guilty to conspiracy and wire fraud and are also awaiting sentencing: Nicole LaViolette, 37, a loan processor from Palm Springs; Jamieson Matykowski, 33, a real estate worker (what’s that?) from Laguna Niguel; and Timothy Holland, 35, an escrow officer from Santa Ana. Richard Maize, 54, a mortgage banker, has also pleaded guilty to conspiracy, bank fraud, and making a false statement on a tax return.
Needless to say, Lehman Brothers Bank, which was defrauded out of up to $142 million, has sued all the parties for civil damages in U.S. District Court in Los Angeles. That trial is on hold pending the outcome of the criminal trials of those who have pleaded not guilty.
As of today, neither Joseph Babajian nor Kyle Grasso show disciplinary action taken against them by the California Department of Real Estate.
Abrams is one of L.A.’s most stellar (sic) citizens: the developer filed bankruptcy in Los Angeles in 1989, facing $30 million in claims from his creditors. One of those creditors received a $2 million judgment, which he has been unable to collect to date. In 2005, he paid $270,000 in fines for violating campaign finance laws while fundraising for Mayor James Hahn’s 2001 campaign.
The charges in the indictment are part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation Division.
The original story was published in the Los Angeles Times and the Mortgage Fraud Blog in August 2007.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.