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August 8, 2007

Massive Mortgage Fraud in L.A. Real Estate

There is some fascinating reading on an alleged, wide-ranging mortgage fraud scheme via an indictment brought down recently by the U.S. Attorney's office in Los Angeles. Here is an example of the sort of thing they are accused of:

The indictment details the purchase of a Beverly Hills home by Fitzgerald and Abrams in 2000 for $2 million, which they reported to a victim bank as $4.395 million after Rizk and Robinson supplied inflated appraisals. Babajian and Grasso, who had the listing of the home, manipulated the Multiple Listing Service database to falsely report that it was listed and sold at $4.495 million. A bogus loan application package went to Lehman Brothers Bank in the name of a straw borrower, and the bank unwittingly funded a loan of more than $2.8 million on the property – more than $800,000 more than the true $2 million purchase price. The conspirators split the excess loan proceeds from the fraud, including more than $46,000 in commissions to Babajian and Grasso.

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