ANCHORAGE -- Developer Lee Baker, Jr., known locally as “The Condo King,” was pled guilty yesterday to lying to Denali Alaskan FCU to obtain as much as $9.4 million in member business loans.
Baker, 56, owner and president of Discovery Construction, pleaded guilty to 12 counts of making false statements to a federally insured financial institution.
The credit union approved Baker, 57, for a loan of more than $9.4 million in 2005 to build the proposed 85-unit Bryn Mawr Apartments complex off of Northern Lights Boulevard. But while Baker took money from the loan account, he claimed in misleading reports to the credit union that specific work was being done at the site when little of the planned construction had taken place, according to the U.S. Attorney's Office.
According to the plea agreement filed in court Wednesday, the credit union required certified reports on the project's progress and expenses before Baker could withdraw money from the loan account.
"Specifically, he certified a description of work completed with associated dollar amounts expended, when, in truth and fact, Baker well knew, the documents misrepresented the status of the construction in the draw requests because the work certified was not completed as indicated," wrote federal prosecutors in the plea agreement.
Baker received about $4.3 million before defaulting on the loan, and the apartments were never completed, the prosecutors said. The credit union had spent far more money on the project than it was worth when Baker defaulted, the plea agreement says.
In March 2008, Denali Alaskan FCU joined contractors and other creditors, suing Baker and his company to recover $16 million in delinquent loans. The credit union said the delinquent loans were the main reason it lost $2.8 million in 2007. In its lawsuit, the credit union accused Baker of fraud. Baker acknowledged that he defaulted on the loans but denied fraud had anything to do with it.
