Man Gets Prison in Embezzlement, Fraud Case

A former Sherman Oaks businessman was sentenced to five years in state prison and ordered to pay more than $1.5 million in restitution after he pleaded guilty to 23 counts of embezzlement and fraud, authorities said.

Los Angeles Superior Court Judge Charles Horan handed down the sentencing for Fred Lee Falk, 57, who had surrendered to authorities Jan. 24. Falk, who was indicted in December, had operated United Mortgage Inc. until he left the state in December, 1990, said Allan C. Fork, a Los Angeles County deputy district attorney in the major fraud division.

Beginning in 1985, Falk sold mortgage notes and secured nearly two dozen business loans and trust deeds without assets to cover his clients’ investments, Fork said. In most cases, the clients invested between $10,000 and $50,000 each, Fork said.

Authorities said Falk used the money of clients who came on board later to secure the investments of people who had provided funds early on. He also used a $150,000 equity loan drawn against his Marina del Rey home to cover clients’ interest payments, Fork said.

Falk will begin serving his sentence immediately.