Two Convicted in $40 Million Mortgage Fraud

admin —  August 11, 2009 — 2 Comments

Kyle Grasso, 38, formerly of Santa Monica, California, and Lila Rizk, 42, Trabuco Canyon, California, have been convicted of conspiracy, bank fraud and numerous loan fraud charges for their roles in a massive mortgage fraud scheme that caused more than $40 million in losses to federally insured banks. Additionally, Grasso was convicted of three counts of money laundering.

The evidence presented at trial showed that Grasso and Rizk were part of a scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods.

Eight other real estate professionals who were part of the scheme previously pleaded guilty to federal felony charges for their roles. The defendants who previously pleaded guilty are:

Charles Elliott Fitzgerald (Scheme Leader,) 48, formerly of Newbury Park and Beverly Hills;

Mark Alan Abrams, 47, Los Angeles, who along with Fitzgerald orchestrated the scheme;

Nicole LaViolette, 38, Palm Springs;

Jamieson Matykowski, 35, Laguna Niguel;

Timothy Holland, 37, Santa Ana;

Richard Maize, 54, Beverly Hills;

Thomas R. Schiff, 47, Brentwood; and

L. Scott Robinson, 46, Dana Point, all of California.

Fitzgerald was previously sentenced to 14 years in federal prison for his participation in the scheme. The remaining defendants are awaiting sentencing.

The wide-ranging and sophisticated scheme defrauded mortgage lenders by obtaining inflated mortgage loans on expensive homes in some of California’s most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

Lehman Brothers Bank and RBC Mortgage Company sued Fitzgerald, Abrams and others in federal court in Los Angeles in 2003 and obtained a receivership, temporary restraining orders and preliminary injunctions against them. Judge Pregerson appointed David J. Pasternak as receiver to recover assets acquired with proceeds of the fraud. The receiver, as well as attorneys and forensic accountants employed by him, have cooperated extensively with the government’s ongoing criminal investigation.

The evidence presented at trial included proof that Grasso profited by collecting hundreds of thousands of dollars in commissions and concealed payments. The prosecution further presented evidence that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme.

Judge Pregerson is scheduled to sentence Grasso and Rizk on January 29, 2010.

A third defendant who went to trial, Joseph Babajian, 56, another Westside real estate agent, was acquitted on 13 criminal counts, and the jury was unable to reach a verdict on eight additional counts. United States District Judge Dean D. Pregerson declared a mistrial as to the eight counts.

This case is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.

Be Sociable, Share!

admin

Posts Google+

2 responses to Two Convicted in $40 Million Mortgage Fraud

  1. MRS ORR IS RIGHT ON TARGET.I ALSO FEEL THAT THE AGENCES THAT DO NOT GO AFTER THE SCAMERS AFTER BEING GIVEN PROOF OF FALSE APTAISALS AND FLIPING ARE ALSO TO BLAME.TOO MANY IN LAW ENFORCEMENT LOOK FOR THE “BIG CASE” TO GET NOTICED.

  2. This is great, but the lender must take some responsibility for not being aware of an inflated value. I work in the real estate market and time after time I see where the lender overlooked numerous warning signs. Example,approving a $700,000 loan with no income, or previous pay history, the credit bureau had no tradelines.This was fraud. I am not saying that every fraud case is like that but I would say that more than half I have reported the lender ALLOWED it by overlooking warning signs.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> 

*