California Real Estate Fraud Report

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Convictions in Beverly Hills Real Estate Fraud Conspiracy

In a case that is symbolic of the unbridled greed of the real estate and mortgage industries in the past 10 years, former Beverly Hills real estate agent Kyle Grasso and real estate appraiser Lila Rizk were convicted on multiple federal charges of bank fraud and conspiracy. They now face sentences of up to 515 years and 425 years respectively when they are formally sentenced next January.

In a clear surprise to prosecutors, the lead defendant, Joseph Babajian, was acquitted of 13 criminal charges, with the jury failing to reach a verdict on 8 additional charges. Prosecutors are evaluating to retry Babajian, despite skepticism from U.S. District Judge Dean D. Pregerson that Babajian could be convicted.

The fraud group’s ringleaders were developers Mark Alan Abrams and Charles Elliott Fitzgerald, who were convicted earlier in the year for their part in a scheme that cost Lehman Brothers Bank and other lenders up to $40 million in losses. According to earlier published reports in the California Real Estate Report and other media, the extent of the losses occurred because Lehman Brothers brushed off reports that they were being ripped-off when contacted by alert real estate agents such as Christian Stevens of Keller Williams Realty.

At its height, the conspiracy ring consisted of the developers, appraisers, mortgage brokers and real estate agents. Lower-end properties in high-priced Westside neighborhoods were purchased by “straw buyers” (non-legitimate borrowers working in the ring). The properties were then refinanced after being appraised at inflated prices and the proceeds distributed to members of the ring, who then defaulted on the loans. Eighty-one of these transactions were performed, with the conspirators borrowing a total of $142 million from Lehman Brothers.

Read the Full Article in the Los Angeles Times.

Also search this blog for “Beverly Hills” to read earlier articles.

© Copyright 2007-2018 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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