Former New York mortgage banker Avram “Avi” Lebor will spend more than seven years in prison and must repay nearly $8.4 million for his role in what federal prosecutors have described as a “massive scheme” to defraud investors.
Lebor, 55, of Lawrence, N.Y., was sentenced Monday in United States District Court in New York City to 87 months in prison for wire fraud and conspiracy to commit wire fraud, according to a written statement released by David Kelley, the U.S. Attorney for the Southern District of New York.
Lebor was also ordered to pay restitution in the preliminary amount of $8,481,606, Kelley said in the statement. He pled guilty to the charges last November and has been ordered to report for prison on Aug. 10.
According to prosecutors, Lebor and his coconspirators promised to provide at least $2.5 billion more than 70 borrowers. Lebor, who was president of MKD Capital Corp., “failed to fund any of these loans, but Lebor and his coconspirators kept approximately $9 million in purportedly ‘fully refundable’ application deposits and approximately $500,000 in legal retainer fees.”
“Lebor held himself out as a direct lender or mortgage banker for commercial real estate development loans, capable of providing multimillion-dollar loans,” prosecutors said. “From at least 1998 to May 2002, Lebor and his co-conspirators participated in a massive scheme to defraud developers seeking to obtain financing for development projects.”
An earlier government statement shows the deals Lebor and his associates were supposed to be putting together involved a convoluted scheme using foreign money.
In a Sept. 10 press release announcing the charges against Lebor, prosecutors said he initially told borrowers that funds for their loans would come from a particular funding source. But after Lebor and his associates received their advance fees, the loan closing would be delayed. Lebor laid the blame for the delay on the borrower, prosecutors alleged.
Between February 2000 and February 2002, Lebor and his associates made a number of outrageous claims about sources of loan funding, including: A Seattle securities company would sell bonds insured by a Swiss insurance company; $1.5 billion from a Swiss investment fund; $3 billion in national oil and gas reserves was “pledged” by the government of Papua, New Guinea; Turkish individuals assigned Lebor $154 million in “safekeeping receipts” that were being held in a bank in the Philippines; a power company in India promised $5 billion in “prime bank guarantees” that would be paid in weekly installments of $100 million.
Lebor, who accepts full responsibility for his crimes, has either returned the advance fees or used them to pay commitment fees while funding was still considered viable, according to his attorneys. “All of the funds taken by Mr. Lebor that were alleged to have been transferred to his family members were ultimately re-invested back into MKD or invested into another (bankrupt) company,” a faxed statement from Brafman & Ross, P.C. read. “As a consequence…there are no funds or assets available from which to reimburse any of the people who lost money in this tragic case.”
Prosecutors said at least 50 development projects around the country were caught up in the scheme.
Prosecutors said Lebor operated the scam by falsely representing that his company had access funds for loans and large real estate projects and then lying when promising to provide loans for the projects.
He also induced developers to pay millions in advance fees as a condition of his company’s review off their loan application and pledge to finance their projects.
Related:
Developers Duped in NYC Scheme
Avram “Avi” Lebor, president of MKD Capital, has plead guilty in a scheme to defraud developers seeking to obtain financing for development projects.
