Former bank president used mortgages to defraud bank, evade taxes

by Francis Monfort01 Jan 2019

A Maryland man has been sentenced to three years in federal prison for fraudulently skimming almost half a million dollars from refinanced loans, according to the US Attorney’s Office for the District of Maryland.

US District Judge Richard Bennett sentenced David Lavine for bank fraud in connection with a scheme to defraud the financial institution where he served and for income tax evasion. The sentence includes two years of supervised release. He was also ordered to pay $892,541.75 in restitution to the financial institution and $365,228.80 in restitution to the IRS and to forfeit $503,378.87.

According to Lavine’s plea agreement, he diverted $100,000 of bank funds to his own benefit while serving as acting president of CFG Community Bank from March 2010 until January 2011. He directed employees to wire funds, mischaracterized as payments to a mortgage broker on bank loan refinances, to a company that belonged to a friend.

Lavine later became president of Capital Financial Ventures, a CFG affiliate. In January 2011, he devised a scheme to defraud CFG through the refinance of two bank-owned commercial mortgage loans and the diversion of the loan payoffs to his personal benefit and the benefit of Charles Tobias, his co-defendant. Lavine also diverted insurance premium refunds on one of the commercial loans purchased by the bank to his personal account.

In the fall of 2011, Lavine and Tobias as owners of Capital T Partners Brookfield attempted to profit from a group of non-performing mortgages the company had purchased by donating some to a charity and taking a deduction on their income tax returns. As a result of a fraudulent appraisal, Lavine and Tobias claimed tax benefits from the $1,032,722 purported charitable deduction they were claiming.

Lavine also admitted that he failed to report income of more than $176,000 in 2010, and failed to report income of $480,289.44, from the loan fraud proceeds and two stolen insurance refunds in 2011. He underpaid his taxes for 2010, 2011, and 2012 by $365,228.80 based on his failure to report fraud proceeds as income and his fraudulent charitable contribution deduction which sheltered reported income.

Tobias previously pleaded guilty to willfully subscribing to a false tax return and was sentenced to two years of probation with eight months of home confinement with electronic monitoring and ordered to pay restitution of $154,438 to the IRS.