Calif. woman gets 3 years for huge mortgage fraud

A federal judge has sentenced a former real estate appraiser to three years in prison for her role in a wide-ranging mortgage fraud scheme.

Prosecutors say 43-year-old Lila Rizk worked with a ring of people that obtained inflated mortgage loans for homes in wealthy Southern California areas like Beverly Hills, La Jolla, Pebble Beach, and Malibu.

FBI and Internal Revenue Service investigators discovered that members of the ring sent fake documents, bogus purchase contracts and appraisals to banks — including Bank of America — to deceive them into making mortgage loans.

The amounts of those loans turned out to be 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.

Rizk was sentenced by United States District Judge Dean D. Pregerson. He warned that other professional real estate appraisers should know that if they inflate appraisals and lie about the value of homes, “there is an overwhelming likelihood that they will be caught and go to prison.”

Eight other real estate professionals who took part in the scheme pleaded guilty to federal charges. The ring's leader, Charles Elliott Fitzgerald, was sentenced to 14 years in federal prison.

After a trial last summer, a jury convicted Lila Rizk of conspiracy, bank fraud, and loan fraud. The judge ordered Rizk, in addition to her prison sentence, to pay part of the $46 million in restitution to the defrauded banks.

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