Va. businessman’s flashy sports cars, mansion on the block as feds pursue $60M bank fraud caseBy AP
Tuesday, February 23, 2010
Va. entrepreneur faces fraud charges, bankruptcy
ASHBURN, Va. — When Virginia steakhouse owner Osama El-Atari disappeared last year, he left behind a $3.8 million McMansion, a few splashy sports cars and a bunch of banks that said he cheated them out of about $60 million.
Authorities had thought El-Atari skipped the country to escape his debts until U.S. Marshals tracked down the 31-year-old in Texas. As federal prosecutors pursue bank fraud charges, with a hearing set for Wednesday, bankruptcy trustee Kevin McCarthy has the unenviable task of trying to satisfy El-Atari’s many creditors.
McCarthy does have some weapons at his disposal: he recently sold El-Atari’s 2006 Ferrari 430 Challenger race car for $105,000, and he’s hoping to get $425,000 or so for El-Atari’s Porsche and Bentley.
And there’s El-Atari’s Loudoun County home, for which he paid $3.8 million — mostly cash — last year.
McCarthy is also seeking permission from the bankruptcy court to do a thorough investigation of two dozen names and entities under which El-Atari did business in the D.C. region, hoping to find funds that will allow creditors to get back some of what they lost.
“There is nothing typical about this case,” McCarthy said.
El-Atari’s detention hearing is Wednesday in U.S. District Court in Alexandria. He has been indicted on similar charges by a federal grand jury in Ohio.
Before his legal troubles surfaced, El-Atari was known as the owner of several Original Steakhouse & Sports Theatre restaurants in the D.C. suburbs. He was just as known for his fleet of sports cars, which attracted the attention of neighbors, the media and police. Courthouses in northern Virginia are replete with the traffic tickets, many for speeding, that El-Atari ran up in his time. The media reported on his cars and businesses. And neighbors blogged about him after the fraud accusations were leveled.
“He was not a wallflower,” said Allie Ash, who sold a Lamborghini to El-Atari through his dealership.
Prosecutors argue his wealth was built largely on fraud. According to court papers, El-Atari obtained tens of millions in loans from several community banks with the same scheme — by borrowing against non-existent life insurance policies.
El-Atari provided bogus phone numbers and e-mail addresses purporting to belong to an insurance-company employee who verified the fake policies. The bogus documentation was convincing enough that four different banks provided loans.
Shortly after one of them, United Bank, became suspicious, El-Atari was already gone. In bankruptcy court, petitioners have filed more than $60 million in claims.
It makes El-Atari’s fraud case one of the largest to be prosecuted in Virginia in decades. Last year, Bollywood promoter and film producer Vijay K. Taneja, 48, of Fairfax, was sentenced to seven years in prison and ordered to pay $33 million in restitution to four banks he swindled in a complicated mortgage fraud scheme. Prosecutors at that time said it was the biggest fraud case prosecuted in the federal courthouse in Alexandria in 20 years.
In El-Atari’s case, United Bank, with headquarters in Washington and Charleston, W.V. reported a $17.6 million write-off for his bad loans. The losses exceeded the bank’s most recent quarterly earnings of $17.4 million.
Bank officials declined to comment, except to say that they appreciated authorities’ efforts to track down El-Atari. The lawyer for El-Atari’s creditors, David Tatge, also declined to comment.
El-Atari had been in trouble with the law even before the latest accusations.
In 2007, federal agents charged him with “conspiracy to manufacture badges,” a misdemeanor case in which El-Atari was represented by famed defense lawyer Plato Cacheris. El-Atari pleaded guilty and paid a $500 fine. Court records indicate a former counterterrorism officer at the Defense Logistics Agency improperly supplied El-Atari with an official police badge.
In 2005, he was charged with assaulting a patron of a buffalo wing bar he owned in Charlottesville in a case that also ensnared Houston Texans Pro Bowl quarterback Matt Schaub. The alleged victim in the case said he had been punched by Schaub, who had been a star at the University of Virginia, and that when the victim tried to call police, El-Atari punched him in the nose. Neither El-Atari nor Schaub were convicted.
Cacheris said he no longer represents El-Atari. When he was arrested in Texas, El-Atari told a judge he was indigent and requested a public defender. The judge appointed a lawyer, with some reservations about whether El-Atari was truly indigent.
The federal public defender in Texas did not return calls seeking comment.
McCarthy, meanwhile, is watching to see how the criminal case will play out, hoping it will help him track down a few more dollars to reimburse the creditors.
“It will help if he’s willing to talk,” McCarthy said.
Tags: Ashburn, Corporate Crime, Entertainment And Media Technology, Food And Drink, Fraud And False Statements, Games, Geography, North America, Recreation And Leisure, Restaurants, Texas, United States, Virginia