SoCal developer pleads guilty to mortgage fraud scheme
mercurynews.com | 5/12/08 | Associated Press
LOS ANGELES—A real estate developer pleaded guilty Friday to a mortgage fraud scheme that involved buying houses in some of Southern alifornia's most ritzy neighborhoods and selling them to fake buyers at inflated prices.
Charles Elliott Fitzgerald, 47, pleaded guilty to conspiracy to commit bank fraud and loan fraud, running a continuing financial crimes enterprise, money laundering, obstruction of justice and three counts of bank fraud. He faces up to life in prison when sentenced Aug. 18. Messages left for his attorney after business hours Friday were not returned.
Fitzgerald and his business partner, Mark Alan Abrams, bought homes in neighborhoods like Beverly Hills, Bel Air, Malibu, La Jolla and Carmel, and then used fraudulent appraisal information to resell them for inflated amounts to fake buyers who purchased the properties with loans, prosecutors said.
Fitzgerald and Abrams recruited the borrowers, repeatedly lied about the homes' value and ran escrow companies to promote the scheme, said Assistant U.S. Attorney Jeremy Matz.
Over three years, Lehman Brothers Bank funded 80 loans worth $137 million—$50 million more than what was actually needed to pay for the homes, Matz said.Fitzgerald and Abrams reaped millions of dollars from the inflated loans and passed kickbacks on to their associates through commissions, prosecutors said.
When Lehman Brothers sued Fitzgerald and others involved in the scheme in April 2003, Fitzgerald hid his assets and fled the country. He lived in Samoa until being extradited to Los Angeles in December 2006.
Abrams and seven other people have pleaded guilty in the case and charges are pending against three others.