Latest News

Granite Bay developer, restaurant mogul sentenced in loan fraud scheme

Abe Alizadeh.
Abe Alizadeh. Sacramento Bee file photo

Abe Alizadeh was the quintessential American success story, a man who emigrated from Iran as a teenager and built up an empire of fast-food restaurants and office buildings that once was valued at $1 billion.

On Friday, the 59-year-old Granite Bay man was sentenced in Sacramento to four years and eight months in federal prison and ordered to pay $15,879,945 in restitution in a wire and bank fraud case that his own lawyer concedes has destroyed Alizadeh's business and reputation and compromised his health.

"Abe Alizadeh comes before the court for sentencing as a result of his unquestionably poor judgment and illegal conduct," defense attorney Malcolm Segal wrote in court documents filed in advance of Friday's sentencing by U.S. District Judge Garland E. Burrell Jr.

Alizadeh's sentence comes three years after Alizadeh and former escrow officer Mary Sue Weaver were indicted in a fraud case that authorities say cost financial institutions nearly $23 million.

Both defendants subsequently accepted plea agreements in the case, which prosecutors say stemmed from the use of phony documents submitted to lenders that falsely inflated the value of properties Alizadeh was purchasing.

Weaver has not yet been sentenced; Alizadeh could have faced up to 30 years, but prosecutors noted that he had been of "substantial assistance to law enforcement authorities" and did not seek a maximum penalty.

For years, Alizadeh was an unqualified success story who employed thousands of workers in his real estate and restaurant business, which included control of 71 Jack in the Box franchises, as well as TGI Fridays, Sonic Burger and Qdoba Mexican Grill outlets.

Operating through his company, Kobra Properties, Alizadeh closed escrow on more than 800 pieces of property, court documents say, and developed "a trusted professional relationship" with Placer Title Co. in Roseville, where Weaver was a senior officer.

But Alizadeh's finances became strained, and prosecutors say that between 2004 and 2008 he cooked up a scheme to submit phony purchase contracts that inflated the price he was actually paying for some properties.

"Because Alizadeh was a well-known major commercial real-estate developer, title companies and banks would compete for his business," court documents say. Alizadeh would sometimes submit contracts that banks thought represented 60 to 65 percent of the property value, documents say, when in reality they represented more than 100 percent of the amount.

"In some cases, to get the money out of escrow and to make it look like he had made a down payment, Alizadeh would write checks for his down payment on the property," court documents say. Then, he would call Weaver to tell her he didn't have money to cover the checks and ask her to delay depositing them until escrow closed and he got money from the banks to cover his checks, documents say.

Alizadeh's empire faltered with the collapse of the real estate market in 2008 and Kobra and other companies went into bankruptcy. He pleaded no contest to felony grand theft in 2012 after state investigators became suspicious that he was diverting sales taxes and employee payroll taxes for his own use, but he was allowed to escape prison time to pay restitution.

  Comments