10/22/2008

News / Virginia Man Arrested in Connection with Mortgage Fraud Scheme

(Alexandria, VA) – Richard A. Forde, age 50, formerly of Great Falls, Virginia, was arrested after a federal grand jury indicted him on October 15, 2008 on charges of conspiracy, bankruptcy fraud, and bank fraud. Chuck Rosenberg, United States Attorney for the Eastern District of Virginia; W. Clarkson McDow, Jr., United States Trustee; and Joseph Persichini, Jr., Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office, made the announcement after Forde’s initial appearance today before a United States Magistrate Judge in Alexandria. A trial date will be set at Forde’s arraignment before United States District Judge Leonie M. Brinkema. Forde faces a maximum penalty of 40 years in prison, five years supervised release, and a fine of approximately $9,700,000 if he is convicted of all charges.

According to the indictment, Forde, who had been the president of an internet business known as tutornet.com, filed for bankruptcy protection in May of 2001, and engaged in a bankruptcy fraud scheme from approximately December 2001 to January 2004. The indictment alleges that Forde conspired with David Freelander, a Virginia Beach, Virginia mortgage broker, and attorney Leslie W. Lickstein, former president of the Northern Virginia Bankruptcy Bar Association, to sell Forde’s Great Falls, Virginia home in 2002, and keep millions in proceeds from that sale from Forde’s bankruptcy estate. The indictment charges that the scheme involved the filing a false lien against the Great Falls property, which was paid off at the closing, with the money going to Forde’s benefit instead of to his creditors. The indictment further alleges that Forde’s sale of the Great Falls property to buyer Alladean Allobaidy was financed, in part, by a $1.5 million promissory note from Allobaidy to Forde. Allobaidy’s periodic payments on the note should have gone to Forde’s creditors in bankruptcy. Instead, the indictment alleges, in a side deal Allobaidy agreed to let Forde continue to reside at the Great Falls property rent free in exchange for not having to make those periodic payments. The indictment charges that Forde lied in a deposition conducted by the bankruptcy trustee, who was investigating the case, and also suborned the perjury of another witness.

According to the indictment, Forde committed bank fraud in connection with a $3.9 million first mortgage that Allobaidy obtained from Lehman Brothers Bank, FSB, in order to buy the Great Falls property. The indictment contends that a side deal between Forde and Allobaidy created a “slush fund” from which Allobaidy’s monthly mortgage payments to Lehman Brothers Bank would be made. The funds, which came from the Lehman Brothers Bank mortgage, were ostensibly to be used by Allobaidy to pay move-in and fix-up expenses in connection with the purchase of the home, but were actually used by Forde for personal expenses and to pay Allobaidy’s mortgage. As a result of the side deal, which was not disclosed to Lehman Brothers Bank, the bank made a larger loan to Allobaidy than would otherwise have been permitted by its internal underwriting guidelines. The indictment also alleges that Forde knowingly signed a false HUD-1 closing statement, which was sent to Lehman Brothers Bank after the closing. When the mortgage later went into default, a Lehman Brothers Bank affiliate took back the property and sold it at a loss of approximately $1.1 million.

David A. Freelander, Leslie M. Lickstein and Alladean M. Allobaidy have already been sentenced for their roles in the scheme. Freelander, the mortgage broker, was sentenced on September 19, 2008, by United States District Judge Claude M. Hilton to 48 months in federal prison, 3 years supervised release, and ordered to pay $5,439,409.62 in restitution. Lickstein was sentenced on August 30, 2007, by United States District Judge Gerald Bruce Lee to 12 months and 1 day in federal prison, 3 years supervised release, and ordered to pay $1,110,000 in restitution. Allobaidy was sentenced on April 27, 2007, by United States District Judge Claude M. Hilton to 15 months in federal prison, 3 years supervised release, and ordered to pay $1,110,000 in restitution.

The case was investigated by the Federal Bureau of Investigation, Washington Field Office. Assistant United States Attorney Thomas H. McQuillan and Special Assistant United States Attorney Dennis J. Early of the Office of the United States Trustee are prosecuting this case on behalf of the United States.

Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
http://washingtondc.fbi.gov/dojpressrel/pressrel08/wfo102008.htm

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