Criminal, Civil Prosecutions Still Ongoing In Early 2000s Beverly Hills Home Flip Operation; Lehman Claims $142M In Fraudulently Obtained Loans

A story in the Los Angeles Times reports on an early 2000s Southern California mortgage fraud, high-end home flipping operation that authorities say grew into one of the biggest and boldest in California history. An excerpt from the story:

• The masterminds were developers Mark Alan Abrams, 46, who had a previous $2-million civil fraud judgment against him, and Charles Elliott Fitzgerald, 47, a bigamist who fled the country in 2003 and was later arrested in Samoa, according to interviews, federal prosecutors and a civil lawsuit filed by Lehman Bros. Bank. They allegedly were assisted by star real estate agents Joseph Babajian, 54, and Kyle Grasso, 36, who earlier this year shared the listing for a $22-million Beverly Hills mansion bought by soccer star David Beckham and his wife, Spice Girl Victoria Beckham. Abrams and Fitzgerald are accused of reaping millions, spending some of the cash on private jet flights and vintage wines -- and much of the rest to buy more houses to keep the alleged scam alive from 2000 to 2003.

The 2003 civil lawsuit filed by Lehman Bros. Bank originally cited 38 loans that were allegedly fraudulently obtained totaling about $62 million. It subsequently found itself holding the bag on 43 additional loans totaling $80 million -- $142 million in all, according to an amended complaint it filed in the lawsuit. The lawsuit is currently on hold pending resolution of a concurrent criminal prosecution of the alleged members of the ring.

For more, see How a bank fell victim to loan fraud (Officials allege a scam used phony appraisals and paperwork to wring millions from deals in the Beverly Hills area).

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