January 18, 2019
By Dominic J Bartolone
Contributing Editor, Fraud Friday
FRAUD FRIDAY – FORMER BALTIMORE BANK PRESIDENT CONVICTED OF FRAUD
David Harris Lavine, 58, of Rockville, Maryland, was sentenced to three years in federal prison, followed by two years of supervised probation for bank fraud and tax evasion.
Lavine, who served as president of CFG Community Bank, and later as president of a bank affiliate, was indicted by a grand jury in September 2017, on charges of theft of bank funds by a bank officer and bank fraud. His business partner, Charles L. Tobias, was indicted along with Lavine for conspiracy to defraud the Internal Revenue Service and tax evasion.
Prosecutors say that between March 2010 and January 2011, Lavine, as acting president, diverted more than $100,000 in bank funds for his personal benefit. According to the indictment, Lavine, while later serving as president of a bank affiliate, Capital Financial Ventures LLC, hatched a plot to defraud CFG Community Bank through the refinance of bank-owned mortgages and by diverting loan proceeds to himself and business partner.
While working for Capital Financial Ventures, Lavine posed as the CEO/President of CFG to convince two borrowers with loan balances over $7.5 million to refinance their loans with other lenders so that they could pay off the CFG loans. Prosecutors say that Lavine then directed the settlement company to send the mortgage payoff not to CFG, but another company, allowing him to divert more than $775,000 of loan proceeds. Lavine then created a false correspondence with the borrowers so he could conceal the arrangement from CFG.
Lavine also diverted over $90,000 in insurance premium refunds from one commercial loan purchased by the bank to his personal account instead of sending the funds directly to the borrower. While the funds were lodged at the bank, Lavine spent $14,000 on personal items. The bank eventually refunded all of the monies back to the borrower.
According to court documents, Lavine and Tobias owned another Maryland company, Capital T Partners Brookfield, LLC. In the fall of 2011, they hatched a scheme to gain profit from a group of non-performing mortgages. They fraudulently “donated” some of the mortgages to charity for an in-kind donation, therefore receiving a valuable tax benefit to their company, while dividing the $1,032,722 tax benefit between their individual tax returns.
In addition to being sentenced to federal prison, Lavine was ordered to pay $892,541 in restitution to the financial institution and $365,228 in restitution to the IRS, and also forfeit $503,378.
Charles Tobias pleaded guilty and was sentenced to eight months of home confinement with two years of probation and ordered to pay $154,438 to the Internal Revenue Service.
Lavine was facing a maximum sentence of thirty years in prison and a $1 million fine for the bank offenses and five years in prison and $250,000 fine for each count of tax evasion.