Mortgage Broker Who Defrauded Lehman Brothers Sentenced


Last week a former Southern California mortgage broker who had pled guilty to a number of charges related to a mortgage and real estate scheme was sentenced to 78 months in federal prison.

Mark Alan Abrams, 49, was charged with bank fraud, conspiracy to commit bank fraud and loan fraud, making a false statement on a tax return and obstruction of justice. Along with his business partner, real estate developer Charles Elliott Fitzgerald, and beginning in 1999 or 2000, Abrams purchased homes in the tony communities of Beverly Hills, Carmel, Bel Air, Malibu and La Jolla, then used fraudulent appraisal documentation to resell the houses to fake buyers. These buyers, who were recruited by Abrams and Fitzgerald, purchased the properties with inflated loans. The pair, along with at least eight other co-conspirators, also forged bogus purchase contracts in order to help borrowers obtain loans from the federally insured banks. These loans represent tens of millions of dollars in losses to those banks.

These “straw borrowers,” some of whom received payments for their role in the theft, lent their names and credit history to Abrams and Fitzgerald to obtain mortgages that were double or triple the actual value of the homes as part of a property-flipping process. The two ringleaders controlled escrow companies that received the millions in fraudulent loan money, thereby giving them access to it.

Lehman Brothers alone funded 80 separate loans worth a total of $137 million– approximately $50 million more than was actually required to purchase the homes, according to prosecutors.

Abrams and Fitzgerald passed on kickbacks through commissions to their associates, after gaining millions in ill-gotten funds.

When Lehman Brothers Bank learned about the scam and sued Fitzgerald and others who had been involved in it, Fitzgerald hid his assets and fled the country. He went to Samoa, where he lived for several years before being extradited back to the United States in December 2006. He then pleaded guilty to conspiracy to commit bank fraud and loan fraud, running a continuing financial crimes enterprise, money laundering, obstruction of justice and three counts of bank fraud.

Abrams has also been ordered to pay more than $41 million in restitution


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