Charles Elliott Fitzgerald, a former Los Angeles-based real estate developer, was sentenced recently to 14 years in federal prison. According to the Department of Justice, Fitzgerald is guilty of carrying out a mortgage fraud scheme that “defrauded banks by deceiving them into funding inflated mortgages.” In addition to having to serve jail time, Fitzgerald was also ordered by U.S. District judge Dean D. Pregerson to pay $42,676,269 in restitution to two of the victim banks that he defrauded. At the sentencing hearing, Judge Pregerson commented that, “This is not a case about deregulation or exploiting loopholes. This is a case of good old-fashioned lying and cheating.”

Seven other defendants also pleaded guilty for their role in the scheme, while three other defendants have charges pending. The department of Justice reported that court documents charge that co-conspiratoirs 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 and 2003, resulting in tens of millions of dollars in losses.”
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