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Broker Commits Fraud With $3.9 Million Mortgage

Lehman Brothers Loses Almost $2 Million

Alexandria, Virginia (Sept. 19, 2008) David Alan Freelander, 50, of Norfolk, Virginia, was sentenced today on charges of bank fraud and bankruptcy fraud in connection with a scheme that took place from approximately December 2001 to May 2004. United States District Judge Claude M. Hilton sentenced Freelander to 48 months in federal prison, 3 years supervised release, and ordered him to pay $5,439,409.62 in restitution. 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, announced the sentencing.

Freelander admitted to operating a bank fraud scheme from approximately February 2002 to May 2003. According to court documents, Freelander, a mortgage broker, fraudulently obtained a mortgage loan from Lehman Brothers Bank, FSB, in the amount of approximately $3.9 million, so that a client, Alladean M. Allobaidy, could buy a home in Great Falls, Virginia. Court documents state that Freelander, Allobaidy and settlement attorney Leslie W. Lickstein worked together to supply the bank with false financial information regarding Allobaidy, and false information regarding the nature of secondary financing in the deal. When the mortgage went into default, a Lehman Brothers Bank affiliate took back the property and sold it at a loss of approximately $1.1 million. Court documents also state that Freelander defrauded Lehman Brothers out of an additional $577,000 in connection with his mortgage broker business in Virginia Beach, Virginia.

Court records state that the sellers of the Great Falls property were in bankruptcy at the time of the sale to Allobaidy. According to court documents, Freelander caused several liens to be placed on the Great Falls property after the owners had filed for bankruptcy, without permission from the Bankruptcy Court. He then had those liens paid off at settlement, siphoning that money, and other money, out of the sale. In reality, the money should have been available to pay creditors in the bankruptcy case. All told, the sale of the Great Falls property caused a loss of approximately $3,750,000 to the bankruptcy case, according to court documents.

Leslie M. Lickstein and Alladean M. Allobaidy were sentenced last year for their roles in the scheme. Lickstein, a former president of the Northern Virginia Bankruptcy Bar Association, 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, the buyer of the Great Falls property, 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. Assistant United States Attorney Thomas H. McQuillan and Special Assistant United States Attorney Dennis Early of the Office of the United States Trustee prosecuted the case for the United States.

SOURCE: United States Attorney's Office
Eastern District of Virginia

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