Thursday, August 13, 2009

Small time hoods, not like Madoff

Trabuco Canyon appraiser convicted in $40 million fraud case
August 10th, 2009, 5:06 pm · 7 Comments · posted by Mathew Padilla
A federal jury today convicted Lila Rizk, 42, of Trabuco Canyon and Kyle Grasso, 38, formerly of Santa Monica of conspiracy, bank fraud and loan fraud charges for their roles in a mortgage fraud scheme that led to more than $40 million in losses at federally insured banks, the Department of Justice said.
Grasso, a real estate agent, also was convicted of three counts of money laundering.
The duo were part of a scheme that obtained inflated mortgage loans on luxury houses, with Grasso earning commissions and other payments and Rizk, an appraiser, earning fees.
Donald Marks, an attorney for Rizk with Marks & Brooklier in Century City, said, “We are very disappointed in the jury verdict. We think our case was very defensible. We think we raised reasonable doubt, and we think she is not guilty. We will continue fighting on her behalf.”
Marks said he would appeal the verdict. A lawyer for Grasso was not immediately reachable by phone.
Eight others involved previously pleaded guilty:
The DOJ dubbed “scheme leader” Charles Elliott Fitzgerald, 48, formerly of Newbury Park and Beverly Hills;
Mark Alan Abrams, 47, of Los Angeles, who along with Fitzgerald orchestrated the scheme, according to the DOJ;
Nicole LaViolette, 38, of Palm Springs;
Jamieson Matykowski, 35, of Laguna Niguel;
Timothy Holland, 37, of Santa Ana;
Richard Maize, 54, of Beverly Hills;
Thomas R. Schiff, 47, of Brentwood; and
L. Scott Robinson, 46, of Dana Point.
Fitzgerald was previously sentenced to 14 years in federal prison, and the remaining defendants are awaiting sentencing.
Here’s more from the DOJ:
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.