Forbes On How Lehman Had Pocket Picked Out Of $50+ Million In Southern California Mortgage Scam

Forbes magzine has an article on the ongoing criminal and civil proceedings involving a major alleged mortgage fraud scam which resulted in Lehman Brothers taking a hit out of upwards of $50 million, according to court documents. An excerpt from the story:

• The U.S. Attorney in Los Angeles says the scam was masterminded by developers Charles Elliot Fitzgerald and Mark Alan Abrams, with help from Joseph Aram Babajian, real estate broker to such stars as Warren Beatty, Ryan Seacrest and Harrison Ford. Five people have been indicted on multiple charges of fraud and conspiracy. Between 2000 and 2003 the defendants allegedly stole tens of millions of dollars by inflating the values of homes. According to the criminal complaint, they bought real estate at fair prices, had the properties appraised at far higher amounts, borrowed those greater sums from Lehman and pocketed the difference, using the money to fund extravagant lifestyles. Five people, developer Abrams among them, have pleaded guilty to multiple felonies and await sentencing after they testify against other defendants. Babajian (pronounced Baba-zhan) and Fitzgerald have entered not guilty pleas.

For more, see Real Estate Rip-Off (How Lehman Brothers was swindled out of $50 million).

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