11 convicted in California fraud
Appraiser sentenced, ordered to pay $46 million
By Inman News, Monday, February 1, 2010.A former real estate appraiser has been sentenced to three years in federal prison and ordered to pay more than $46 million in restitution for her role in a mortgage fraud scheme involving dozens of luxury homes in California.
Lila Rizk, 43, of Rancho Santa Margarita, Calif., is among 11 real estate professionals to have been convicted in the scheme.
Rizk was accused of collecting hundreds of thousands of dollars in fees for providing inflated appraisals on homes in Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla.
Prosecutors said Rizk typically appraised homes at three times their value, by using "comps," or comparable sales, of homes that were bigger, more luxurious and in better neighborhoods than those she appraised.
Once Rizk had inflated a few dozen homes, she then used those homes as comps to justify inflated prices for other properties, prosecutors said.
One lender alone, Lehman Brothers Bank, was deceived into funding more than 80 such inflated loans from 2000-03, resulting in tens of millions of dollars in losses, prosecutors said. Lehman Brothers Bank's parent company, Lehman Brothers Holdings Inc., filed for Chapter 11 bankruptcy protection in September 2008.
Rizk received a three-year prison term Friday, following her conviction last summer on conspiracy, bank fraud and numerous loan fraud charges, the U.S. Attorney's Office for the Central District of California said.
Ten other real estate professionals have been convicted of federal charges related to the scheme:
- Charles Elliott Fitzgerald, a developer formerly of Newbury Park and Beverly Hills, the alleged leader of the scheme, was sentenced to 14 years in prison. ...CONTINUED
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Submitted by David Jarnagin on February 1, 2010 - 2:28pm.
Is there any Quality Control out there???
This type of problem has become rampant in the real estate and finance industries. There needs to be more focus on lender and title company documentation, regarding notary and affidavit requirements and subsequent liability.
There is a large amount of affidavit fraud done at the escrow company prior to funding, particularly in Arizona!
Submitted by Gregory Schreiber on February 1, 2010 - 3:20pm.
Why do they always think they can get away with it?????????
Submitted by Clete Pfannenstein on February 1, 2010 - 3:37pm.
If you're going to scam a bank, then you better be willing to pay the price when you get caught. On second thought what the hell were they thinking??? They deserve what they are getting!! It's people like that who ARE part of the problem, and the rest of us in the industry end up paying for their scamming, cheating, and greed!!
Submitted by Vinh Nguyen, CRB, CIPS, TRC on February 2, 2010 - 7:04am.
With all the messes we have and the magnitude of the problems, yet so far, only a few people got convicted? We have to have a better way!