Man Sentenced for his Role in Illegal Flipping Scheme

Allison Tussey —  September 14, 2011 — Leave a comment

Richard A. Maize, 53, Beverly Hills, California, a West Los Angeles mortgage banker, has been sentenced to 18 months in federal prison for his role in a massive mortgage fraud scam that caused more than $18.5 million in losses to banks, including his former employer.

Maize was sentenced by United States District Judge Dean D. Pregerson. In addition to the prison term, which Maize was ordered to begin serving on December 2, Judge Pregerson ordered Maize to pay $4 million in restitution, about $3.6 million of which has already been paid to victims Lehman Brothers Bank and RBC Mortgage Company.

Maize previously pleaded guilty to charges of conspiracy to commit bank fraud and loan fraud, three counts of bank fraud and one count of making a false statement on a federal tax return.

According to court documents, Maize and others charged in the case were 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 conspirators obtained inflated mortgage loans on expensive homes in some of California’s most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills and Malibu.

Maize, was a co-founder of Americorp Funding, a mortgage banking company with offices in West Los Angeles and Pasadena that originated, brokered, funded and sold mortgage loans. Maize was Americorp‘s top-producing mortgage banker, closing more than $192 million in loans in 2001 and more than $245 million in loans in 2002. Maize owned 45 percent of Americorp until about December 2000, when he and his partners sold Americorp to Prism Mortgage Company, which later changed its name to RBC Mortgage Company. At that time, Maize became the president of the Americorp division of a Prism/RBC subsidiary.

Other defendants charged in this case were previously sentenced, including:

Charles Elliott Fitzgerald, 50, Newbury Park, who was sentenced to 168 months in federal prison;

Mark Alan Abrams, 50, Long Beach, who was sentenced to 78 months;

Jamieson Matykowski, 37, Laguna Niguel, who was sentenced to 18 months;

Lila Rizk, 44, Rancho Santa Margarita, who was sentenced to 36 months; and

Kyle Grasso, 40, Santa Monica, who was sentenced to one year in prison.

In late 1999 or early 2000, Fitzgerald and Abrams started a mortgage brokering company called Desert Pacific Financial, Inc. 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.

Fitzgerald and Abrams purchased homes at their real market values and then re-sold the properties at double or triple the prices. Armed with inflated appraisals and other false documentation, the conspirators submitted false and inflated loan application packages. Abrams and his associates recruited “straw borrowers” to obtain loans for the inflated prices. The straw borrowers allowed the conspirators to use their names and credit to obtain mortgages as part of this “property-flipping” process. As president of Americorp, Maize had contacts and business relationships with the victim lenders, which he exploited to deceive the victim lenders into approving and funding the inflated loans. He also abused his position as president and defrauded his employer, Prism/RBC, by deceiving the company into funding the inflated loans.

The case against Maize details the purchase by Fitzgerald and Abrams of a Bel Air home for $735,000, which they flipped by selling to a straw borrower for $2.37 million. A bogus loan application package went to Lehman Brothers Bank, and the bank unwittingly funded a loan of more than $1.4 million on the property ““ nearly double the true $735,000 purchase price ““ almost all of which ended up in one of the in-house escrow companies controlled by Fitzgerald and Abrams. According to the Maize charges, Lehman Brothers Bank alone was deceived into funding about 40 such inflated loans from March 2000 through July 2002. These 40 loans were for more than $28 million over the true prices of the homes.

According to court documents, Maize received hundreds of thousands of dollars in kickbacks for his assistance in getting the loans approved. In 2001, he failed to report more than $175,000 of these kickbacks on his federal tax return.

The investigation in this case was conducted by the Federal Bureau of Investigation and IRS – Criminal Investigation.

Allison Tussey

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