Mazur Is Indicted Over Handling of Real Estate Deals
Sherman Mazur, once a rising star in American real estate, was indicted Tuesday in Los Angeles on charges of bankruptcy fraud in connection with the way he managed more than 200 property partnerships across the country.
The 45-count indictment accused Mazur of concealing partnership assets, money laundering and making false statements to federal bankruptcy authorities. Mazur could not be reached for comment, but he and his attorneys have consistently denied that he has done anything wrong.
U.S. law enforcement officials in Los Angeles hailed the indictment as the most important of its kind ever handed down in Southern California. “This may be the largest bankruptcy fraud ever prosecuted in the United States,” said Marcy J. Tiffany, head of the regional office of the U.S. Trustee, which supervises bankruptcy-court filings.
She added: “It sends a very important message: Bankruptcy fraud will not be tolerated no matter how sophisticated it is.”
FBI and IRS agents arrested the 42-year-old Mazur early Tuesday afternoon in his offices in Century City. He was taken to the Metropolitan Detention Center in downtown Los Angeles, where he was to be held overnight.
A bond hearing was scheduled for this morning. Assistant U.S. Atty. Maureen A. Tighe, who is prosecuting the case, said in a phone interview that she will seek to have Mazur’s bond set at $500,000. He faces a maximum sentence of 375 years in jail and a fine of $6.25 million.
At the heart of the indictment is the accusation that Mazur illegally diverted $1 million from bankrupt partnerships that he managed in order to finance his “lavish lifestyle.”
According to the U.S. attorney’s office, Mazur “conspired with certain employees to divert money from the bankrupt partnerships by commingling partnership funds in one large insurance trust account.” He then diverted about $1 million of those funds into his own accounts, prosecutors said.
At his zenith in the mid-1980s, Mazur was touted as an emerging force in U.S. real estate, with an empire of about $750 million in apartments and office buildings taken over from shaky real estate partnerships.
Mazur gained control of the properties with the understanding that he would nurse them back to health. The properties, which usually ended up in the bankruptcy courts, were mainly located in the Sun Belt.
Mazur’s businesses financed a grand lifestyle, including a fleet of nine cars that cost close to $500,000. His automobiles included two Rolls-Royces, two Mercedes and a Ferrari. His home near UCLA is worth about $7.5 million.
Mazur is a native New Yorker known for his boyish good looks and stylish dress. Those who know him say he is charming, confident and quick to drop names of influential people.
Mazur recently agreed to pay nearly $3.9 million to settle with creditors of his former company, American Resource Corp., now in liquidation. Sources said Tuesday, however, that the agreement may be in jeopardy because Mazur has not made the initial payment of $250,000.
Court papers filed in connection with the settlement agreement accused Mazur of “looting and mismanaging” American Resource. Among the contentions was that Mazur received more than $13.8 million from his affiliated companies from early 1986 to 1988 at a time when he paid $179,000 in taxes to the IRS.