Broker in Mortgage Fraud Case Pleads Guilty to Charges

A former Orange County mortgage broker pleaded guilty Friday to federal mail fraud and racketeering charges stemming from the issuance of $15 million worth of mortgage bonds to an Alhambra bank and a Studio City-based pension fund.

Federal prosecutors described the plea by John Fred Parrish, 54, as an important milestone in a case that resulted from a joint state, federal and local investigation into mortgage fraud in Orange County. The investigation is continuing, they said.

Authorities said that between 1982 and 1984 the bank and the pension fund invested the money in overvalued real estate deals put together by Parrish’s Barclays Mortgage Corp. The firm, which filed for bankruptcy protection in March, 1986, has no connection to London-based Barclays Bank.

On Friday, Parrish, who is also a convicted extortionist, pleaded guilty to two counts of mail fraud and one count of racketeering. His attorney, Marc B. Geller, said the deal came as part of a plea bargain with federal prosecutors.

Project Never Built

One of the mail fraud counts involved Progressive Savings & Loan Assn, which in 1982 invested $5.7 million with Parrish’s company for the purpose of developing 40 acres of Laguna Beach property. The project, Canyon Acres Ltd., was never built.

Parrish acknowledged that he failed to inform the bank that the land was virtually unbuildable and that “development would require construction of a private water system. . . .”

“I gave the false impression that Canyon Acres Ltd. was an independent and separate entity, not associated with Barclays or myself,” Parrish told U.S. District Judge Terry J. Hatter at the hearing.

“In fact, Canyon Acres Ltd. was comprised of Barclays Mortgage as general partner and myself as a limited partner,” Parrish said.

Progressive is suing Parrish to recover its money, according to court documents.

Solicited Pension Plan

The second mail fraud count involved the Motion Picture Industry Pension Plan. In 1984, Parrish told the judge, he solicited the Pension Plan to invest $5 million in a $25-million offering of mortgage guarantee bonds, which in effect are insurance for mortgages. The plan’s investment was backed up by 11 deeds of trust for various pieces of property, Parrish said.

After making one interest payment on the pension fund’s investment, according to court records, Barclays Mortgage defaulted on the rest of the notes.

The Studio City-based fund, which represents 36,000 employees in the entertainment industry, recently won civil judgments totaling approximately $27 million against Barclays, according to James V. Selna, the fund’s attorney. “We haven’t got a dime,” said Selna. “We won every single battle in record time but are losing the war.”

Selna said the investment package Parrish’s firm offered appeared to be conservative and safe.

Employed 119 People

At its peak, Parrish’s insurance and mortgage companies employed 119 people and handled real estate and mortgage insurance transactions around the country, according to court records. In its bankruptcy petition filed last year, Barclays listed $70 million in assets and $70 million in liabilities.

A native of Dublin, Ga., Parrish worked 15 years for the Georgia International Finance Co. and later served as vice president of operations for United Family Life Insurance Co. in Atlanta. He moved to Southern California in 1980, according to court records.

“My attorney told me to say nothing except my name, rank and serial number,” Parrish told a reporter outside the courtroom. He said he is officially retired but still serves as a financial consultant in Orange County.

“Mr. Parrish acknowledged his guilt at a very early stage in the proceedings,” said Geller, Parrish’s attorney, after Parrish entered his guilty plea. “It is rare that a person is so honest and candid.”

Hatter set an April 27 sentencing date for Parrish, who faces a maximum sentence of 30 years in prison and $500,000 in fines, according to Assistant U.S. Atty. Terreec Bowers.

After earlier pleading guilty to extortion charges, Parrish faces a maximum 10-year sentence for allegedly threatening to harm Mark A. Wood, a Laguna Niguel man who owed Parrish $500,000.

Last week, Wood filed a lawsuit against Parrish in Los Angeles federal court. The suit seeks $10 million in damages against Parrish for racketeering and “emotional distress” stemming from the threats. Wood claims that he and his wife had to go into hiding for six weeks while the FBI investigated the case, according to the suit.