'Massive fraud' nets plea of guilty

The Baltimore Sun

Alan B. Fabian, a Maryland entrepreneur, philanthropist and former Republican fundraiser, pleaded guilty yesterday in Baltimore federal court to a multiyear scheme that the government says defrauded banks and businesses of at least $32 million.

"This is a massive fraud," U.S. District Judge Richard D. Bennett said several times during the two-hour arraignment.

Fabian, 43, had been indicted on 26 counts, including money laundering and perjury in connection with the scheme. He pleaded guilty yesterday to two counts of the indictment after reaching a plea agreement with the U.S. attorney's office.

Fabian could get a maximum of 30 years in prison and be fined as much as $1 million on one count of mail fraud. He could also be sentenced to three years and fined $100,000 for filing a false tax return. Sentencing is scheduled to begin Sept. 22.

The government says Fabian operated his scheme through various Maryland companies and a city philanthropic venture that he started to provide Internet access and training to underserved areas.

He is a former finance committee chairman for Michael B. Steele's U.S. Senate campaign and for Mitt Romney's presidential bid.

"He's here to accept responsibility and come in and give your honor, frankly, a much fuller picture of the crime," Fabian's attorney, James Wyda, told the court. Fabian had previously pleaded not guilty, and a trial date was set.

Fabian, a certified public accountant, offered no apologies or explanations for his actions.

He said little more than a clear and repeated "Yes, your honor."

His days of private jet travel are over. The multiple cars, the yacht, the eight properties in North Carolina and his $1.5 million Hunt Valley home are all subject to forfeiture, according to the court. The judge said Fabian can expect prison time.

Though his attorney said Fabian maintains unspecified "business interests" in North Carolina and Northern Virginia, Fabian is considered indigent by the court. He is represented by the Maryland federal public defender.

Reading from a statement of facts that Fabian acknowledged as true, Assistant U.S. Attorney Tonya K. Kowitz said Fabian bilked millions from banks and business partners through Strategic Partners International LLC and Strategic Partners International Inc., companies he created.

From March 2001 to June 2004, Kowitz said, Fabian forged invoices and wire-transfer receipts to trick a Georgia computer-leasing company, Solarcom Inc., and various funding sources into believing that he had purchased millions of dollars in computer equipment, saying they owed him for the materials.

(Solarcom has since been acquired by Presidio Inc., a Greenbelt technology company.

After financial backers forced Fabian's business into bankruptcy in 2004, he lied to the court about his transactions to cover his crime, Kowitz said. He also filed several false tax returns, misrepresenting his income and the amount of federal taxes he had paid throughout the year.

Fabian used some of the stolen money he received to launch the Centre for Management and Technology, a Baltimore nonprofit that offered technology consulting help and solutions to qualifying charities, the government said.

In 2007, the center, known as CMAT, donated $200,000 to West Baltimore's Union Baptist Church to help it open a neighborhood technology center.

"In this neighborhood, they can't afford to have DSL, to maintain a computer, worry about viruses," Fabian told The Sun at the time. "We do it all for you."

Union Baptist Church leaders could not be reached yesterday.

Fabian also used CMAT to funnel donations to his children's private schools, arrange for private jet travel and purchase property in North Carolina, Kowitz said.

The nonprofit opened lines of credit with banks including Wachovia and Provident and later defaulted on the loans.

Baltimore attorney Joel I. Sher represents the trustee in the bankruptcy case. He said he has filed 11 civil suits against Fabian, his wife and businesses that received stolen money.

"These were fraudulent payments, and they have to return them," Sher said. "Some of the things we saw in [court filings] were quite startling. I think it was a multiyear pervasive scheme. ... Basically, we accused him of running a Ponzi scheme, and I think the facts support it."

Financial institutions including Provident and Wells Fargo banks have also sued Fabian.

Fabian donated to many Republican candidates through the years, including former Lieutenant Governor Steele.

Steele could not be reached for comment yesterday, but campaign finance records appear to indicate that Steele returned the money.

Fabian reportedly resigned from Romney's campaign after he was indicted in August.

Romney spokesman Eric Fehrnstrom declined to comment yesterday. Campaign records appear to show that Romney, too, returned certain funds donated by Fabian.

Wyda said that during Fabian's sentencing, he expects to present details mitigating the severity of the crime.

Yesterday, Fabian acknowledged defrauding entities out of $7 million to $20 million. The government contends that the figure is much higher.

"We are still far apart in terms of loss" assessment, Wyda said.

After the arraignment, Fabian's friends and family filed out of the court, shielding one another from reporters and declining to comment.

Fabian must check in with supervising officers daily via telephone and is not allowed to open new lines of credit while he is awaiting sentencing. His travel is restricted to Maryland, Washington and 20 miles into Northern Virginia, where his attorney said he has business contacts.

"He is trying to sustain his life the best he can," Wyda said.


Alan Fabian timeline

2001 - Alan Fabian enters into sale and lease-back agreements with Solarcom Inc., purporting to buy computer equipment for the Georgia company to lease. In some cases, he never buys the equipment. In others, he buys substantially less. He still charges Solarcom and financial backers full price.

2003 - Fabian uses millions he has fraudulently received to launch the Centre for Management and Technology, a nonprofit designed to provide technology services to charities.

August 2004 - Fabian's company is forced into bankruptcy.

April 2005 - Fabian opens lines of credit and takes out loans at Provident Bank on behalf of CMAT.

July 2007 - The Harvey Johnson Neighborhood CyberCentre opens in the basement of West Baltimore's Union Baptist Church. The technology center received $200,000 from Fabian's non-profit.

August 2007 - Fabian is indicted on felony fraud charges.

Yesterday - Fabian pleads guilty to mail fraud and filing a false tax return.

[ Source: U.S. attorney's office for the District of Maryland]

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