MESEREAU LAW GROUP
A Professional Corporation
Beverly Hills Courier
August 13, 2009
By Abbey Hood
t’s vindication day for celebrity realtor, Joseph Babajian, 56, who was acquitted by a federal jury on 13 criminal counts, with the jury left unable to reach a verdict on eight additional counts, in a massive mortgage fraud scheme that caused more than $40 million in losses to federally insured banks.
United States District Judge Dean D. Pregerson declared a mistrial on the eight counts.
“We are very happy the jury exonerated Mr. Babajian,” his attorney Tom Mesereau told The Courier. “We maintained from day one he was completely innocent of these charges. It has been a long ordeal for him, but he has prevailed.”
Babajian represents such clients as Barbra Stresiand, Victoria and David Beckham and Oscar De La Hoya. Mesereau said his client intends to go right back to work.
But it was not all good news on Monday afternoon when the five-week trial came to an end. His partner, Kyle Grasso, 38, of Santa Monica and licensed real estate appraiser Lila Rizk, 42, of Trabuco Canyon were convicted of conspiracy, bank fraud and numerous loan fraud charges for their roles in the mortgage fraud scheme. Additionally, Grasso was convicted of three counts of money laundering.
The evidence presented at trial showed that Grasso and Rizk were part of a scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods.
The wide-ranging and sophisticated scheme defrauded mortgage lenders by obtaining inflated mortgage loans on expensive homes in some of California’s most exclusive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars higher than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.
Lehman Brothers Bank and RBC Mortgage Company sued Fitzgerald, Abrams and others in federal court in Los Angeles in 2003 and obtained a receivership, temporary restraining orders and preliminary injunctions against them. Judge Pregerson appointed David J. Pasternak as receiver to recover assets acquired with proceeds of the fraud. The receiver, as well as attorneys and forensic accountants employed by him, have cooperated extensively with the government’s ongoing criminal investigation.
The evidence presented at trial included proof that Grasso profited by collecting hundreds of thousands of dollars in commissions and concealed payments. The prosecution further presented evidence that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme.
Grasso faces maximum sentences totaling 515 years. Rizk’s sentences could total 425 years. Sentencing is scheduled for Jan. 29.
Eight other real estate professionals who were part of the scheme previously pleaded guilty to federal felony charges for their roles including Beverly Hills Richard Maize, 54, who acted as a mortgage banker as a principal of Americorp Funding. It was through his work as a mortgage banker that he participated in the scheme, according to Assistant US Attorney Jeremy Matz.
Maize signed a plea agreement in 2007, pleading guilty to conspiracy to commit bank fraud, bank fraud and making false statements on his tax returns, said Matz.
Maize and wife Rochelle, a prominent Beverly Hills real estate agent, ran a non-profit The Rochelle and Richard Maize Foundation.
However, it appears the website for The Foundation is no longer in existence. As of The Courier’s press time, it had been taken down.
Maize currently awaits sentencing.