Already facing a wall of state tax charges and possible prison, former property developer and fast-food mogul Abolghassem, “Abe” Alizadeh faced federal criminal charges for the first time Thursday.
A federal grand jury returned a 21-count indictment against Alizadeh of Granite Bay and former escrow officer Mary Sue Weaver of Roseville, charging them with $20 million in loan fraud on large real estate projects.
The indictment alleges that Weaver and Alizadeh engaged in a scheme to inflate loan amounts with bogus documents, including altered purchase contracts for million-dollar acquisitions of commercial and residential real estate.
None of the six developments mentioned in the indictment were completed, and it appears that some of the loan proceeds were used to try to shore up Alizadeh’s sagging business empire, U. S. Attorney Benjamin Wagner said at a press conference Thursday.
“He had a real need for funds,” Wagner said.
Weaver, 62, was an executive with Placer Title Co. who is accused of assisting the fraud scheme in various ways, including taking money of other Placer Title clients and temporarily moving the funds into accounts controlled by Alizadeh to make sure he had enough money to cover closing costs.
Both defendants are expected to turn themselves in, perhaps as early as Friday, Wagner said.
Attorneys for the pair strongly defended their clients in telephone interviews.
Alizadeh’s Sacramento attorney, Malcolm Segal, said he had reviewed the charges against his client, but they “seem to lack substance.”
“Mr. Alizadeh intends to vigorously dispute the allegations, and has been looking forward for the past five years to the opportunity to litigate them,” Segal said.
According to Wagner, Weaver was investigated by Placer Title Co. and terminated.
But her attorney, William Portanova, said, “Sue Weaver was never fired by anybody. She resigned many years ago. She was and still is a top executive who handles some of the most complex transactions in the region, and has committed no crime at any time.”
Referring to the time elapsed since the alleged loan frauds, Portanova said, “After 11 years has passed, it will be a challenge to bring our evidence together to prove her innocence, but we’ll do it. She was at the top of the operation at Placer and he was a major client, no doubt about that.”
But, he added, “If the government is looking for perfection in the paperwork of the real estate boom, it’s going to be disappointed, no matter where it looks.”
The transactions cited in the indictment stretched from mid-2004 to April 2008, a period prior to and during the housing market collapse and one of the worst recessions since the Great Depression.
“Over the last five years, we have prosecuted over 300 mortgage fraud defendants,” Wagner said in a press release. “Although we are seven years removed from the financial crisis, the statute of limitations has not run (out) on many offenses from that period.”
Alizadeh, 56, was the principal owner of Kobra Properties, which had extensive real estate holdings in Northern California. He also owned dozens of fast-food outlets in the region, including Jack In The Box, TGI Fridays, Sonic Burger and Qdoba Mexican Grill outlets, according to Wagner.
Although his assets were once estimated at $1 billion, Kobra and several other entities controlled by Alizadeh went into bankruptcy in 2008.
In 2012, Alizadeh pleaded no contest to one felony grand theft and two misdemeanor counts for misappropriation of sales tax and nonpayment of unemployment insurance contributions, according to the California State Board of Equalization.
The investigation began in April 2010 when the BOE said it and other state agencies had become suspicious that Alizadeh was diverting sales and employee payroll tax dollars for his business and personal interests. Alizadeh failed to remit more than $5.4 million in sales tax to BOE, and nearly $1.8 million to the state Employment Development Department, not including penalties and interest.
In November 2012, the BOE said his sentencing was continued for four years to allow him to make restitution for the money owed. He was ordered to pay $300,000 annually. If Alizadeh failed to make timely or adequate payments during the four years, he was to be sentenced to up to four years four months in state prison. As of Thursday, the BOE said it could not confirm whether those payments had been made.
If convicted on the federal charges, Alizadeh and Weaver face a maximum penalty of 30 years in prison and a $1 million fine for each count, according to the U.S. attorney’s office.
Call The Bee’s Denny Walsh, (916) 321-1189.