Lila Rizk, 43, Rancho Santa Margarita, California, a former state-licensed real estate appraiser, was sentenced to three years in federal prison and ordered to pay more than $46 million in restitution for her role in a massive mortgage fraud scheme that caused tens of millions of dollars in losses to federally insured banks. Rizk received the three-year prison term after her conviction last summer on conspiracy, bank fraud and numerous loan fraud charges.
As previously reported on Mortgage Fraud Blog, as per the court documents (part 2 of court documents), the evidence presented at Rizk’s trial last summer showed that she was part of a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California’s most expensive 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 more 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.
The evidence presented at trial showed that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme. Her appraisals typically valued the homes three times higher than what the homes really cost. In order to supposedly justify these inflated values, Rizk used “comps,” or comparable homes, that were far bigger, more luxurious, and in better neighborhoods than the homes she appraised. Once she had inflated a few dozen homes, she then used those homes as “comps” to supposedly justify inflated prices for homes later in the scheme.
Ten other real estate professionals have been convicted of federal charges related to the scheme. They are:
• Charles Elliott Fitzgerald, scheme leader, a developer formerly of Newbury Park and Beverly Hills, California, who previously was sentenced to 14 years in prison.
• Mark Alan Abrams, Los Angeles, California, a mortgage broker who along with Fitzgerald orchestrated the scheme, who is scheduled to be sentenced on April 12, 2010.
• Nicole LaViolette, Palm Springs, California, a loan processor, who is scheduled to be sentenced on June 14, 2010.
• Jamieson Matykowski, Laguna Niguel, California, who found houses for the scheme, is scheduled to be sentenced on March 29, 2010.
• Timothy Holland, Santa Ana, California, an escrow officer, who is scheduled to be sentenced on July 19, 2010.
• Richard Maize, Beverly Hills, California, a mortgage banker, who is scheduled to be sentenced on June 28, 2010.
• Thomas R. Schiff, Brentwood, California, a mortgage banker, who was previously sentenced to 6 months in prison.
• L. Scott Robinson, Dana Point, California, an appraiser, who is scheduled to be sentenced on April 2, 2010.
• Kyle Grasso, formerly of Santa Monica, California, a real estate agent, who is scheduled to be sentenced on February 19, 2010.
• Joseph Babajian, Los Angeles, California, a real estate agent, who is scheduled to be sentenced on February 22, 2010.
Rizk was sentenced by United States District Judge Dean D. Pregerson, who warned that other professional real estate appraisers should know that if they inflate appraisals and lie about the value of homes, “there is an overwhelming likelihood that they will be caught and go to prison.”
This case is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.