Broker in Mortgage Fraud Pleads Guilty : $15 Million in Worthless Bonds Sold to Bank, Pension Fund

A former Orange County mortgage broker has pleaded guilty 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 Friday 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 probe is continuing, they said.

Authorities said that between 1982 and 1984, the bank and the pension fund invested the money in over-valued 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.

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.

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. However, the project, Canyon Acres Ltd., was never built.

Unbuildable Land

Parrish acknowledged that he failed to inform the bank that the land was virtually unbuildable, and “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.”

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

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.

After making one interest payment on the pension fund’s investment, according to court records, Barclays’ 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,” Selna added. “We won every single battle in record time, but are losing the war.”

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 $600,000 in assets and $70 million in liabilities.

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 Asst. U.S. Atty. Terree 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.