Thursday, December 14, 2006

Alleged Mortgage Fraud Ringleader Deported from Samoa to Face US Charges

Charles Elliott Fitzgerald, 46, real estate developer, formerly of Los Angeles, California, was returned to the United States to face charges in connection with allegations that he ran a $50 million mortgage fraud scheme.  Fitzgerald was arrested and deported by authorities in the Independent State of Samoa, a Pacific island nation where he fled to in June 2003 after he was sued by a mortgage lender he allegedly defrauded.

Samoan law enforcement officials, responding to a request from the United States, arrested Fitzgerald in the Samoan capital of Apia on December 11, 2006. Fitzgerald was deported by Samoa because his United States passport had been revoked after the criminal charges were filed, which in turn subjected him to immediate deportation under Samoan law. Federal authorities in the United States expressed great appreciation for the cooperation of the Government of Samoa and its law enforcement authorities.

Fitzgerald is charged with one count of conspiracy to commit bank fraud and loan fraud, four counts of bank fraud, one count of loan fraud, five counts of money laundering and one count of obstruction of justice.

The arrest warrant for Fitzgerald was unsealed, as well as criminal informations against four co-conspirators. The other four defendants previously charged are:

- Mark Alan Abrams, 45, Long Beach, California;
- Nicole LaViolette, 37, Palm Springs, California;
- Jamieson Matykowski, 33, Laguna Niguel, California; and
- Timothy Holland, 35, Santa Ana, California.

Abrams previously pleaded guilty to charges of conspiracy to commit bank fraud and loan fraud, bank fraud, making a false statement on a tax return and obstruction of justice. LaViolette, Matykowski and Holland previously pleaded guilty to charges of conspiracy to commit bank fraud and loan fraud, as well as wire fraud. All four are scheduled to be sentenced next year.

Fitzgerald and the others were allegedly involved in a wide-ranging and sophisticated conspiracy to defraud federally insured mortgage lenders out of tens of millions of dollars. As part of the scam, the co-conspirators obtained 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. According to the recently unsealed charges, the conspiracy was spearheaded by Fitzgerald and Abrams.

In the charges filed against the others, Fitzgerald is identified as the “DPF/BHEF Conspirator.” According to these documents, in late 1999 or early 2000, Fitzgerald went into business with Abrams in a mortgage brokering company called Desert Pacific Financial, Inc. (DPF). The company sent mortgage loan applications to lenders for review and funding, and received commissions from those lenders when the loans closed. In late 2001, Fitzgerald and Abrams renamed the company Beverly Hills Estates Funding, Inc. (BHEF).

LaViolette was a loan processor at DPF/BHEF, and Matykowski was a property scout who helped locate homes for potential purchase. Fitzgerald and Abrams also had several in-house escrow companies, in which Holland was the escrow officer.

Fitzgerald and Abrams, working with Matykowski and real estate agents, located homes for sale. According to court documents, they primarily looked for homes with purchase prices they could inflate, which generally meant they used homes with good views in expensive neighborhoods throughout California.

As part of the scheme, Fitzgerald and Abrams purchased homes at their real market values. For example, the case against Abrams details the purchase of a home on Roscomare Road in Bel Air, California which Fitzgerald and Abrams bought for $735,000 in the name of ”Matykowski or his assignee,” even though they were at all times in actual control of the home.

Fitzgerald, Abrams and associates then recruited “straw borrowers” to obtain inflated loans on the properties. The straw borrowers, some of whom received payments, allowed Fitzgerald and Abrams to use their names and credit to obtain mortgages as part of a “property-flipping” process. After obtaining inflated appraisals and other false documentation that were submitted with loan applications, Fitzgerald and Abrams obtained mortgages in the names of the straw borrowers for double or triple the actual values of the homes. For example, when they flipped the Roscomare Road property, they “sold” the residence to the straw borrower for $2,370,000. The Abrams charges allege that a bogus loan application package went to Lehman Brothers Bank seeking a loan of $1,422,000, nearly double the true $735,000 purchase price, and that Lehman Brothers Bank unwittingly funded a loan of more than $1.4 million on the property, almost all of which ended up in one of the in-house escrow companies controlled by Fitzgerald and Abrams.

The victim lenders, having been deceived by the false documentation supplied by Fitzgerald, Abrams, and others, unwittingly funded the inflated loans. According to the Abrams charges, Lehman Brothers Bank alone was deceived into funding about 80 such inflated loans from March 2000 through March 2003. These 80 loans were more than $50 million over the true prices of the homes. Fitzgerald and Abrams allegedly received millions of dollars of these excess loan proceeds, and their associates received kickbacks, inflated appraisal fees, and large commissions.

Lehman Brothers Bank 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.

If he is convicted of the 12 counts in the criminal complaint, Fitzgerald faces a maximum possible sentence of 265 years in federal prison.

mortgage fraud

1. I knew Charles…

   Posted by  on  12/29  at  12:14 PM

2. I met Elliott Fitzgerald one time.  I was concerned at the time by the way he spent money.  I’ve lost a lot of my retirement money to his scam.  He is a dis-service to the Mormons and lots of law abiding citizens with his actions.  What good does it do us to send him to prison for possible sentences longer than his lifetime?  He should be made to work for the rest of his life for no pay, not just sit in jail at taxpayer’s expense. But that is not the American way of doing things.

   Posted by  on  04/16  at  09:50 AM

3. Why are these articles ignoring the fact that he also had two wives and two seperate families, neither of which khew about the other. Or that he stole his Father-in-law’s leer jet to escape to Samoa with his first wife and her kids, completely abandoning his other child with his other wife. This guy is beyond repairable. His narcissism is so complete that he is not capable of feeling remourse or changing his ways. He will lie to everyone about anything and should get all 265 years coming his way.

   Posted by  on  04/16  at  11:49 PM

4. I met Fitzgerald in Samoa in 2006.
   I found out about him through a friend of mine and what he had done in the US
   He was ripping this friend of mine off whom had befriended him and fallen for his slick talk.Unfortunately my friend could see nothing wrong in him despite repeated warnings from her family and friends.
   I compiled a dossier on Fitzgerald thro` what I found on the internet plus his schemes he was getting my friend to invest in (scams) and sent it to the Samoan immigration service which I hope helped in his getting caught.This man is an out and out con artist with no conscience what so ever,lock him up and throw away the key.

   Posted by  on  02/29  at  10:07 PM