Developer, lawyer charged in bank fraud

October 07, 1998|By Michael James | Michael James,SUN STAFF

A prominent Prince George's County land developer and his lawyer were accused yesterday of running a multimillion-dollar "shell game" that defrauded two banks during slick maneuverings in high-powered real estate deals.

Daniel I. Colton of the former real estate company Colton and Laskin Inc. and attorney Ellis J. Koch are charged with conspiracy and bank fraud for shielding assets from banks looking to collect on defaulted loans, federal prosecutors said.

"They concealed, like a pea under a shell, $2.1 million," Assistant U.S. Attorney Dale P. Kelberman told jurors in opening statements yesterday in U.S. District Court in Baltimore.

Both banks negotiated for lower sums on the defaulted loans because Colton, Koch and another partner, Dennis Laskin, never revealed the existence of a $10 million trust fund that Laskin controlled, Kelberman said. The money would have enabled the men to pay back more than they did to settle the defaulted loans.

Laskin has pleaded guilty and will testify against the men later in the trial.

Lawyers for the men told the jury that Laskin was the mastermind behind the scheme and that Colton and Koch were manipulated by him.

"This case is about two things, deceit and greed," said William Brennan, the attorney representing Colton. "But the deceit, the greed and the lies were by Dennis Laskin."

The trial has offered a glimpse of the wheeling and dealing that goes on among banks, businesses and politicians involved in land deals. It also has offered a glimpse of the goings-on in the legal world of former Maryland governor Marvin Mandel, an attorney who at one time represented Colton and Laskin during some of their financial dealings.

Mandel, who is not charged with any crime, represented the developers in 1991 when they defaulted on a $3.1 million loan they had obtained from TrustBank in Prince George's County. The bank had lent the real estate company the cash to develop a parcel near Bowie, court papers said.

But Colton and Laskin Inc. failed to make the payments, and Mandel negotiated "to buy back the note" -- essentially buying back the loan -- for $1.5 million, Kelberman said.

Colton and Laskin Inc. "used a shell corporation, New Homes Inc., as the ostensible purchaser of the note in order to conceal from the bank the defendants' use of the Laskin trust funds to finance the purchase of the note at a discount," a federal indictment said.

New Homes Inc. existed only on paper and was devised by Colton and Laskin Inc. as a way to shield their true worth, Kelberman said.

The FBI and the Internal Revenue Service investigated the case.

Another deal named in the indictment occurred in 1992, when Colton and Laskin Inc. negotiated to buy back a $20 million loan from Second National Federal Savings Bank.

Pub Date: 10/07/98

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