Richard A. Forde, 50, formerly of Great Falls, Virginia, was convicted by a jury on charges of conspiracy, bankruptcy fraud, and bank fraud.
Forde faces a maximum penalty of 40 years in prison, five years supervised release, and a fine of approximately $9.7 million when he is sentenced on May 15, 2009. United States District Judge Anthony J. Trenga, United States District Judge, presided over the trial in Alexandria federal court.
According to court documents, Forde, who had been the president of an Internet business known as tutornet.com, filed for bankruptcy protection in May of 2001, and engaged in a bankruptcy fraud scheme from approximately December 2001 to January 2004. The indictment in the case alleged that Forde conspired with David Freelander, a Virginia Beach, Virginia mortgage broker, and attorney Leslie W. Lickstein, former president of the Northern Virginia Bankruptcy Bar Association, to sell Forde‘s Great Falls, Virginia home in 2002 for almost $6 million and keep millions in proceeds from that sale from Forde‘s bankruptcy estate. According to court testimony, the sale was necessary because Forde could not keep current on his $17,000 per month mortgage payments and was facing foreclosure. The alleged scheme involved the filing a false lien against the Great Falls property, which was paid off at the closing of the sale, with the money going to Forde‘s benefit instead of to his creditors.
The indictment also alleged that Forde‘s sale of the Great Falls property to buyer Alladean Allobaidy was financed, in part, by a $1.5 million promissory note from Allobaidy to Forde. Allobaidy‘s periodic payments on the note were supposed to have gone to Forde‘s creditors in bankruptcy. Instead, in an alleged side deal, Allobaidy agreed to let Forde continue to reside at the Great Falls property rent free in exchange for not having to make those periodic payments. The indictment also alleged that Forde lied in a deposition conducted by the bankruptcy trustee, who was investigating the case, and also suborned the perjury of another witness.
According to the indictment, Forde was alleged to have committed bank fraud in connection with a $3.9 million first mortgage that Allobaidy obtained from Lehman Brothers Bank, FSB, in order to buy the Great Falls property. The bank fraud scheme involved an alleged side deal between Forde and Allobaidy in which a “slush fund” was created from which Allobaidy‘s monthly mortgage payments to Lehman Brothers Bank were made. The funds, which came from the Lehman Brothers Bank mortgage, were ostensibly to be used by Allobaidy to pay move-in and fix-up expenses in connection with the purchase of the home, but were actually used by Forde for personal expenses and to pay Allobaidy‘s mortgage. As a result of the side deal, which was not disclosed to Lehman Brothers Bank, the bank made a larger loan to Allobaidy than would otherwise have been permitted by its internal underwriting guidelines. The indictment also alleged that Forde knowingly signed a false HUD-1 closing statement, which was sent to Lehman Brothers Bank after the closing. When the mortgage later went into default, a Lehman Brothers Bank affiliate took back the property and sold it at a loss of approximately $1.1 million.
David A. Freelander, Leslie M. Lickstein, and Alladean M. Allobaidy have already been sentenced for their roles in the scheme. Freelander, the mortgage broker, was sentenced on September 19, 2008 , by United States District Judge Claude M. Hilton to 48 months in federal prison, three years supervised release, and ordered to pay $5,439,409.62 in restitution. Lickstein was sentenced on August 30, 2007 , by United States District Judge Gerald Bruce Lee to 12 months and one day in federal prison, three years supervised release, and ordered to pay $1,110,000 in restitution. Allobaidy was sentenced on April 27, 2007 , by United States District Judge Claude M. Hilton to 15 months in federal prison, three years supervised release, and ordered to pay $1,110,000 in restitution.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; W. Clarkson McDow, Jr., United States Trustee; and, Joseph Persichini, Jr., Assistant Director in Charge of the FBI Washington Field Office, made the announcement.
The case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Thomas H. McQuillan and Special Assistant United States Attorney Dennis J. Early of the Office of the United States Trustee are prosecuted this case on behalf of the United States.