Leader of Calif. mortgage scam sentenced

LOS ANGELES, Oct. 3 (UPI) -- A federal judge Friday sentenced a former Los Angeles real estate developer to 14 years in prison for his role in a $50 million mortgage fraud.

Charles Fitzgerald, 48, was also ordered to pay more than $42 million in restitution for masterminding the scheme in which falsified paperwork was used to obtain loans for homes that were worth far less than their stated value.

"This is not a case about deregulation or exploiting loopholes," U.S. District Judge Dean Pregerson said at the sentencing in downtown Los Angeles. "This is a case of good old-fashioned lying and cheating."

The loans were made on homes in high-end California communities such as Beverly Hills, Bel Air, Malibu, Pebble Beach and La Jolla from 2000 through 2003 as the state was in the middle of its real-estate boom. The conspirators were accused of paying the asking price, taking out loans based on falsified appraisals at well above that price and pocketing the difference.

The U.S. Attorney's office said in a written statement that Lehman Brothers Bank alone wrote more than 80 such inflated loans.

Fitzgerald was the seventh defendant to plead guilty in the case. He was arrested in 2006 and pleaded guilty in May to six counts of conspiracy, fraud, money laundering and organizing a continuing financial crimes enterprise.