Burlington man, fugitive in federal fraud case, arrested [Times-News, Burlington, N.C.]

Sept. 30--A former Burlington businessman and fugitive in a federal mortgage fraud case was arrested Friday at an airport in Virginia.

Fabian David Sparrow is one of several charged with conspiracy to commit fraud and obstructing justice out of the U.S. District Court for the Western District of North Carolina. The scheme allegedly sold 1,100 homes in a five-year period through federally insured home loans. The loan applications contained false information about buyers' ability to repay the loans and inflated the cost of the homes.

Mortgage insurance claims have mounted to more than $24 million net losses and the U.S. has lost more than $16 million in the scheme, according to court documents.

Sparrow was listed as a fugitive in August, after a co-defendant pleaded guilty in the case. A fugitive warrant for his arrest was issued Aug. 7. Sparrow was indicted Aug. 6.

On Friday, Sparrow was arrested at Dulles International Airport outside Washington, D.C., court documents showed Monday.

He appeared Friday before a federal judge in the Eastern District of Virginia's Alexandria Division. He was held without bond over the weekend. Bond was to be set at a hearing there Monday afternoon. Details of that appearance weren't available Monday.

The court will appoint counsel to represent him there and he will retain counsel for hearings in North Carolina, documents said.

It's unclear when Sparrow will be transferred to North Carolina, said Lia Bantavani, spokeswoman for U.S. Department of Justice in the Western District of North Carolina.

A federal grand jury indictment accuses Sparrow and co-defendants of conspiring to defraud the federal agencies through fraudulent home loans and applications, conspiring to defraud customers through those fraudulent loans and destroying documents to impede a federal investigation.

Sparrow was a manager for Phoenix Housing Group'sBurlington location from January 2006 to October 2010. The company did business here as Southern Showcase Housing, at 778 S. Graham-Hopedale Road. As the manager there, Sparrow oversaw a staff of about 10 people and reported to Dennis Wayne Parris, a co-defendant in the case and the company's senior vice president, according to the indictment.

The case also involves offices in Asheboro, Hickory and Pinehurst and mortgage officers in Charlotte and Myrtle Beach, S.C.

The case alleges that the company's salespeople told customers their monthly payments would be lower than what they actually were after the closing sale in order to entice more customers to buy. The company didn't report $500 down payments it received as payment on the mortgage, rather keeping that amount as profit. Customers sometimes paid for "discount points," advertised as lowering the rate of monthly payments but which the company kept as profit.

Sparrow is specifically accused of manipulating customers' credit ratings by temporarily adding them to his accounts and advancing them funds through lenders in the scheme. The advancement was used to ensure customers qualified for federally insured mortgage loans. The inflated and "bogus" invoices were added to the price the company charged for homes.

In addition, Sparrow and other co-defendants are accused of:

-- Preparing and submitting false financial information and documentation without customers' knowledge

-- Not disclosing higher mortgage loan fees than originally stated

-- Concealing the status of homes that were "used" or foreclosed on, but which were sold as "new" or "spec homes"

-- Inflating the price of land and homes through fraudulent real estate appraisals

-- And instructing employees to manipulate the mortgage application process through various means, including forged customer signatures.

Sparrow faces 55 years in prison and a $1.5 million fine if convicted of all offenses.

Three defendants have already pleaded guilty in the case.

On Oct. 28, 2007, Sparrow's brother drowned in Lake Mackintosh during a Halloween party held at Sparrow's lakeside home on Deerfield Drive in Burlington.

Sparrow's criminal record includes convictions in 1995 for misdemeanor conspiracy and in 2000 for possession of schedule VI and schedule II controlled substances. He completed probation for both sentences.

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