FBI Probes Va. Company's Workers in House Swindle

Lawsuits Outline Scheme to Forge Deeds to Steal Vacant Properties

The FBI is investigating whether employees of a now-defunct Northern Virginia mortgage company were involved in what several lawsuits allege was a scheme to steal vacant houses by forging deeds, according to people familiar with the probe.

The people under investigation worked for 1st American Mortgage of Vienna, which boasted that it delivered "honest expert advice." The company, which operated about half a dozen satellite offices in the Washington area, went out of business last fall after eight years. The former chief executive's $2 million house in a gated community in McLean has been foreclosed upon.

As federal investigators step up efforts to crack down on irregularities in the real estate industry, the lawsuits and FBI probe provide a glimpse into some of the practices that flourished before the housing boom dissolved.

Some of the allegations of fraud are outlined in filings in D.C. Superior Court and in U.S. Bankruptcy Court in Alexandria by those who claim to be victims, including two District property owners and the pension fund of a Northern Virginia company.

The property owners have alleged in separate lawsuits that people, unbeknownst to them, illegally took possession of their vacant property by forging the deeds, and then attempted to sell the property. Loans in both situations were arranged by a 1st American employee. Late last year, judges found that the deeds were invalid and ordered the properties returned to their rightful owners.

Southern Management Corp., the region's largest owner of apartment buildings, is claiming that its pension fund, which covers 1,200 workers, was victimized. In legal filings, it says that the fund, as an investment, financed a total of $2 million in loans for the two stolen properties.

Southern Management has filed suit in D.C. Superior Court and made a claim in bankruptcy court alleging that a title company, a notary and a real estate investor, Steve Hetrick, were involved in fraud. It is working to recoup about $2 million it put into those loans.

One of the properties involved is a vacant seven-bedroom townhouse on California Street NW in the District's Kalorama neighborhood. The other is a townhouse on 10th Street NW in the Shaw area.

On Nov. 22, 2004, Hetrick, owner of the now-defunct Lion Real Estate Development & Management of Northern Virginia, obtained the vacant California Street property with a deed purportedly signed by the owners, three brothers from the Middle East, according to the lawsuits.

The stated purchase price on the deed was $60,000, a fraction of the house's value, and none of that money went to the brothers, the lawsuit says.

Afterward, Hetrick and his wife, Svetlana, secured a $1.5 million loan from 1st American Mortgage for the house, according to the lawsuit. Southern Management's pension fund purchased the loan in January 2005 from 1st American Mortgage as an investment.

The Hetricks, who never occupied the house and made no significant improvements or alterations, then listed it for sale with a real estate agent, according to the Southern Management lawsuit.