Real Estate developer charged with fraud and false statements
Anchorage, Alaska – United States Attorney Karen L. Loeffler announced today, January 20, 2012, that Lee E. Baker, Jr., of Anchorage, has been indicted by a federal grand jury in Anchorage for financial fraud and money laundering, in connection with construction loans obtained by his real estate development company from Denali Alaskan Federal Credit Union (DAFCU) in 2005, for two real estate development projects.
The fourteen-count indictment named Baker, age 55, of Anchorage, Alaska, as the sole defendant.
According to the indictment presented to the grand jury, Lee E. Baker, Jr., president and 100% shareholder of Discovery Construction, Inc. (“DCI”), misled DAFCU as to the true reason for a loan to purchase property and then develop Lake View Estates, a duplex condominium construction project consisting of 52 units in Wasilla, Alaska. DCI owned the property, but the indictment alleges that DCI quit claimed the property to Baker so that shortly thereafter Baker could sell it back to DCI for $1.4 million, a loan financed by DAFCU. Further, according to the indictment, DAFCU was unaware of the ownership history of the property and did not know that the loan was actually used by Baker to reduce his shareholder debt to his company.
The indictment also alleges that Baker made several false statements to DAFCU while drawing down the proceeds of a $9.2 million construction loan obtained for a proposed 85 unit apartment project, “Bryn Mawr” located on Northern Lights Boulevard in East Anchorage. The indictment alleges that Baker, as President of DCI, submitted 12 draw requests certifying each time certain work had been completed on the Bryn Mawr project, when actually very little work had been done and the total amount completed in each request was false. Baker ultimately defaulted on this loan. Baker is also charged with one count of money laundering related to a transaction where he used the money obtained from the last falsely-certified draw to pay a subcontractor for work on another project.
Assistant United States Attorney Retta Randall, who presented the case to the grand jury, indicated that the law provides for a maximum total sentence of 30 years in prison, a fine of one million dollars, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
The Federal Bureau of Investigation and the Internal Revenue Service conducted the investigation leading to the indictment in this case.
An indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.