When his Owings Mills mortgage firm faced financial trouble in the late 1990s, federal authorities say, Kent E. Baklor devised a sophisticated phony loan scheme that brought millions into his business to cover high salaries, leases on two Mercedes-Benz vehicles and a personal trainer.
When he realized last summer that he couldn't repay the lending institutions he had been defrauding for more than two years, Baklor came up with another plan: He surrendered to authorities.
Now, Baklor, 43, the former owner of Bankers First Mortgage Company, faces lawsuits and steep restitution payments. He also faces a possible prison sentence after pleading guilty yesterday to one count of federal bank fraud, admitting that his company obtained about $8.5 million from lenders for phantom borrowers.
"He really did do this out of a sense of remorse and regret about the situation, and a sense of wanting to make things right," defense attorney Andrew J. Graham of Baltimore said.
Baklor, who lives in Owings Mills, has repaid lenders about $350,000, according to court papers filed yesterday in U.S. District Court in Baltimore. He also has agreed to cooperate with lenders seeking to recoup additional funds through civil litigation.
Federal prosecutors said in court records that Baklor launched the fraud scheme in April 1998 because of financial difficulties at Bankers First. In 1997, the company lost between $350,000 and $500,000 through one arm of the business, a home improvement lender called American Advanced Applications.
To try to make up the losses, Bankers First began submitting loan advance requests to lending institutions in the names of fictitious borrowers, records show. Instead of going to cover a home mortgage, though, the money would go directly to the accounts of Bankers First, records show.
Court records show the money helped pay for Baklor's income, which had totaled more than $1 million in the three years before the fraud scheme started.
It also covered the cost of a $600-per-month personal trainer for Baklor, $3,000-per-month leases on luxury automobiles and credit card bills for food, travel and clothes that regularly reached $5,000 to $6,000 each month, according to court records.
