Suspect Pleads Guilty in Disaster Loan Fraud Case

A ringleader in a disaster loan fraud case pleaded guilty Thursday to eight felony counts for his role in fraudulently applying for government assistance loans after the Northridge earthquake and for defrauding two banks out of $11.4 million.

Faramarz Javidzad, 35, of Beverly Hills pleaded guilty in U.S. District Court to filing false business loan applications to the U.S. Small Business Administration.

Javidzad was a loan packager, prosecutors said, who helped clients apply for low-interest SBA loans after the 1993 Malibu fires and the Northridge quake in January 1994. He is the 18th person to be convicted in this case, prosecutors said.

His brother, Fariborz Javidzad, 33, the alleged co-ringleader of this SBA disaster loan fraud scheme, is a fugitive and is believed to be in Iran, investigators said.

Debbie Jones, the SBA’s special agent in charge, said the brothers had a hand in $34-million worth of SBA loan applications, and that more than $10 million in loans were funded.

The Javidzad brothers helped falsify tax returns and various phony business sales statements to help clients apply for SBA disaster loans, investigators said.

After the Northridge quake, the SBA issued billions of dollars in disaster assistance loans.

Javidzad also pleaded guilty to defrauding Sanwa Bank and the Bank of America through a series of false loan applications.

Javidzad faces a maximum sentence of up to 100 years in prison and a $5-million fine. He is to be sentenced May 28.