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Wednesday, May 18, 2022

Pair Cultivated Clubby Image as They Set Plans for Alleged Scam

Pair Cultivated Clubby Image as They Set Plans for Alleged Scam


Staff Reporters

They came across as standard issue real estate players.

Mark Alan Abrams and Charles Elliott Fitzgerald were a couple of big guys both over 6 feet with families and penchants for nice clothes, steak dinners and making the right connections.

The pair appears to have joined forces in the late 1990s and like most profitable partnerships operated in almost yin-and-yang harmony. Where one was gregarious the other was reserved. One appears to have been the dealmaker, the other the behind-the-scenes numbers guy.

But while their lavish spending on meals, clothes and property engendered confidence from real estate agents, maitre d’s and lenders, it belied the fact that Abrams and Fitzgerald were running what their biggest mortgage lender claims was a massive fraud.

Lehman Bros. sued the two in April, along with a host of others it claims were involved, alleging they used falsified documentation and inflated real estate appraisals to obtain $140 million in mortgages either directly funded by Lehman or purchased from another lender to buy 84 homes in California over the last three years.

Appraise: One of the Hollywood Hills properties said to be overvalued (photo).

The scam, as alleged by Lehman, involved identifying a home on the market for between $700,000 and $900,000 and then having it appraised for $2.5 million. Then, a brokerage company affiliated with Abrams or Fitzgerald would obtain a mortgage of about $1.5 million from Lehman.

Abrams has not filed a response to the charges. Fitzgerald is believed to have fled the country, and a U.S. District Court judge has issued a criminal contempt citation and a warrant for his arrest.

One for the books

Investment fraud schemes like the one alleged by Lehman are not uncommon in Southern California, although the scope of this one is impressive. “It rivals some of the previous mortgage fraud cases filed by this U.S. Attorney’s office,” said Jan Handzlik, a partner at Kirkland & Ellis LLP and former federal prosecutor in L.A.

As in other big cases, including the $255 million Ponzi scheme orchestrated by EarthLink Inc. co-founder Reed Slatkin, who pleaded guilty and is awaiting sentencing later this year, it is alleged that Abrams and Fitzgerald used their large network of friends and associates to pull in investors.

“He was polite,” said Myra Nourmand, whose Beverly Hills-based real estate brokerage, Nourmand & Associates, had dealings with Abrams. “He was a gentleman. I’m pretty much surprised (by the allegations).”

The charm often gave way to a temper, however, especially after the Lehman suit was filed, according to a former employee of both men. Abrams and his wife, Peggy, listed as an officer of one of the companies registered to her husband, would often have expletive-filled shouting matches behind the glass doors of Abrams’ office, according to the employee.

“He’d find a way to compliment your shoelaces if possible, but he had an explosive temper,” said the employee. “Whenever there was a decision to be made, I had to go to Mark he was like the dad. When I had any problems with Mark, I would go to Elliott.”

By all appearances, Charles Elliott Fitzgerald, known as Elliott, seemed to be the straight shooter and a family man. He tipped waiters well, rarely drank and regularly attended the Mormon Church, sources said.

“I am completely shocked,” said Ernest Ross, general manager of Ruth’s Chris Steakhouse in Beverly Hills, where Fitzgerald frequently dined and was known to drop a 300 percent tip. “We all thought this guy was a really nice guy.”

Many of Fitzgerald’s alleged business partners came through his connections with the Mormon Church. Fitzgerald, his wife and five kids regularly attended temples in Westwood and Newbury Park, said James Jacobson, a public affairs official with the Church of Jesus Christ of Latter Day Saints in Los Angeles.

John Gregory Van Orman, who was the bishop of the Mormon Church in Newbury Park until about two years ago, also worked as a contractor for Fitzgerald and is one of dozens of defendants added by Lehman Bros. to its suit, according to court papers.

Van Orman was out of town and unavailable for comment, but his wife, Mickey Van Orman, who claimed she and her husband knew Fitzgerald for at least eight years, said the allegations against her husband were untrue.

“We thought (Fitzgerald) was one (kind of) person, and it was deceptive,” she said. “We pictured them as a wonderful family.”

Political connections

Where Fitzgerald cultivated his religious associates, Abrams played the political game.

He was a paid consultant on the campaign of state Sen. Jim Battin, R-La Quinta, according to the California Fair Political Practices Commission. In 1998, Battin was fined $14,000 by the FPPC for accepting improper gifts in 1995, including a $509 suit paid for by Abrams and more than $2,800 in hotel bills Abrams picked up.

Battin did not return a call seeking comment.

More recently, Abrams’ wife, his father, Herbert, and other defendants in the Lehman suit affiliated with either Abrams or Fitzgerald contributed $9,000 in $1,000 increments to Mayor James Hahn’s mayoral campaign between December 2000 and September 2001, according to the L.A. City Ethics Commission.

“I’m very concerned about the allegations,” said Hahn, who acknowledged in an interview with the Business Journal last week that he met Abrams during the campaign. “He was a contributor to my campaign.”

Abrams first surfaced as a principal of Irvine-based homebuilder Aziz and Abrams Corp., which ranked No. 86 among Southern California builders in home sales in 1988, according to a 1989 survey by the Los Angeles Times.

A year later, however, the then-Newport Beach resident filed personal bankruptcy, with $11.4 million owed to 101 creditors ranging from construction vendors to his business partner Albert Aziz ($266,000), the Internal Revenue Service ($540,000) and Tiffany & Co. ($7,900), according his Chapter 7 filing.

Within a few years, Abrams cropped up in both business and political circles in the Coachella Valley, working for Pacific/West Communications Group, a public relations and transportation consulting firm. He also worked its mortgage brokerage subsidiary, Pacific/West Consolidated Capital.

By the late ’90s, Abrams had apparently rebuilt both his business and political connections in Los Angeles. His Beverly Hills-based Desert Pacific Financial Inc. ranked No. 24 and No. 10 in mortgage origination in 1999 and 2000, respectively, according to Mortgage Originator magazine.

It was about this time that Fitzgerald and Abrams struck up their partnership.

Fitzgerald had been running his own mortgage business in Salt Lake City with his brother, Michael, before moving to California in the early 1990s, said a source familiar with the litigation. After Fitzgerald moved to California, he got into real estate and eventually settled down in Beverly Hills, the source said.

Fitzgerald bought tracts of hillside land with expansive views that were difficult to build on and was known for his expertise in putting up retaining walls, the source said.

In 1999, Fitzgerald and a Pendleton, Ore.-based plastic surgeon, Steven Lloyd Neal, planned to build a statuary park along the San Diego (405) Freeway near the Getty Center that would be dedicated to the Book of Mormon, according to reports in Salt Lake City’s Deseret News. Jacobson said the Mormon Church knew about the project but never sponsored it. The project never got off the round, he said.

Double duty

In December 2002, Fitzgerald purchased a 5,600-square-foot, $725,000 home in Hesperia for Shawna Fitzgerald, who according to court papers is one of Fitzgerald’s two wives.

The papers, filed by Michael Wachtell, attorney for court-appointed receiver David Pasternak, said Shawna Fitzgerald found out about Fitzgerald’s other wife, Meya, about 18 months ago and immediately filed for divorce.

The divorce was never finalized, however, and Shawna Fitzgerald said she last saw Fitzgerald and Abrams in May 2003, when they spent several days gambling in Las Vegas, the filing says.

“Shawna said that she lived with Elliott during the weekdays for most of their marriage and that she understood that Meya was the ‘weekend’ wife,” Wachtell wrote in the filing.

Both Abrams and Fitzgerald had allegedly used much of the funds from the mortgages to support lavish lifestyles before their assets were frozen in May, and the court seized Abrams’ 4,800-square-foot home in Beverly Hills.

Users of the three Desert Pacific credit cards, one of which is in Mark Abrams’ name, charged $173,000 in January alone, according to court documents. In June, the Abrams filed a motion in June seeking release of assets to cover about $27,000 in monthly expenses, including $3,800 to maintain a Jackson, Wyo. vacation home and more than $2,700 in monthly psychotherapy expenses.

Meanwhile, the Fitzgeralds had racked up Visa charges of $115,609 in January, mostly toward expensive hotels and designer goods, according to a June 16 motion filed by Pasternak.

At this point, though, their whereabouts are unknown.

Meya Fitzgerald’s parents, Ray and Freida Tibbits, stopped by the Fitzgerald house on June 12, loaded a truck with sports memorabilia, computer disks, an envelope containing tax documents and other personal items, according to Wachtell’s July 11 motion.

Meya Fitzgerald told her parents that “if they didn’t leave, Elliott would be jailed for from seven to 10 years because his partner Mark Abrams got into trouble and Elliott would be found guilty by association,” the motion says.

The Tibbits believe Elliott Fitzgerald, Meya and their children have “moved to an island in the South Pacific where there are no extradition treaties with the United States,” according to the filing.

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