TAMPA — Calling him "a good example of why we are in an economic crisis," a federal judge on Thursday sentenced Clearwater house flipper Mark Lepzinski to 13 months in prison for lying on applications for loans he knew he couldn't afford.
"It's simple greed, and we're going to see a lot more of it in this court than we should in coming years," Judge James D. Whittemore told Lepzinski, 51. "The harm occasioned by mortgage fraud is not just economic, it is much broader than lenders simply losing money."
Lepzinski said he made mortgage payments for years on up to 50 properties, employing many workers as he fixed up distressed properties and "added value to the community." He said his "business plan" fell apart only when the real estate market collapsed and he was unable to afford the payments or sell the houses.
"I did those things not with any ill will or intent to harm anyone," he said. "I'm very humbled and embarrassed."
But Assistant U.S. Attorney Thomas Palermo said Lepzinski, who has a master's degree in business administration, conspired with co-defendant and loan officer Victor Clavizzao, a convicted felon, to calculate the precise income Lepzinski had to show in order to qualify for loans of varying amounts.
They "knew what numbers to hit without raising a red flag or being too low to make him ineligible," Palermo said. "It's the application of insider knowledge that let them hide income and liabilities."
Both men have been the subject of numerous St. Petersburg Times stories, which detailed a series of suspect transactions in which houses and condos throughout Pinellas County sold for unusually high amounts even as the real estate market began to crash.
Among the transactions cited in the federal charges against the two men was a house Lepzinski bought in 2006 for $599,000 and quickly sold for a $51,000 profit. The house soon sold again for $700,000 to the grandparents of Clavizzao's girlfriend, who said they were pressured into signing the documents.
Clavizzao, who has a long criminal record, pleaded guilty in August to one felony count of mail and wire fraud. He faces five years prison and is scheduled for sentencing April 28.
Lepzinski pleaded guilty to the same charge, which carries a maximum penalty of five years in prison. However, he received a sentence at the low end of federal guidelines because he has no criminal history.
A former Merrill Lynch financial analyst turned prolific house flipper, Lepzinski obtained a Florida real estate license in 2007. His conviction in December should have barred him from working as a real estate agent, though in January he signed on with the Clearwater office of Charles Rutenberg Realty.
The agency's president, John Rurkowski, said he wasn't aware of any problems because the state Department of Business and Professional Regulation's Web site still showed Lepzinski as holding a "current and active" license. That was changed to "inactive" this week after the Times questioned the agency about the case.
As part of his plea deal, Lepzinski also agreed to pay an $889,000 federal forfeiture judgment even though he declared bankruptcy last year with debts of more than $1 million. He will serve his time at a federal prison camp in the Florida Panhandle, followed by three years of probation.
"You knew better," the judge told him, "You did what millions of people have done, and look where we are today."
Susan Taylor Martin can be contacted at firstname.lastname@example.org.