Brooklyn, NY – Lender Admits to $44M Fraud of Fannie Mae

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    Brooklyn, NY – A former mortgage lender pleaded guilty today to conspiring to commit fraud in a $44 million theft of payoff proceeds for refinanced mortgage loans funded by Fannie Mae.

    L. P., whose Olympia Mortgage Corporation originatedand serviced mortgage loans owned by Fannie Mae, admitted in U.S. District Court in Brooklyn to a charge of conspiracy to commit wire fraud.

    A grand jury indictment charged him and another officer of the same Brooklyn-based firm, B. G., with conspiracy, wire fraud and bank fraud.

    The charges stemmed from FBI investigations into mortgage-related fraud in the troubled U.S. housing industry.

    P. & G. had controlled Olympia from 1994 until November 2004, when the firm gave up its mortgage lender license.

    Prosecutors said that, when Olympia refinanced a Fannie Mae mortgage loan, Fannie Mae wired the money to an Olympia account. Olympia was then required to pay off the underlying mortgage loan by sending the outstanding balance to Fannie Mae, but P. was accused of misappropriating the proceeds to his firm.

    “When the fraudulent scheme was revealed, Fannie Mae held nearly $44 million in unpaid, but refinanced, underlying mortgage loans from Olympia Mortgage,” the U.S. Attorney’s office in Brooklyn said at the time of the indictment.

    P. faces a maximum sentence of up to 20 years on the charge, but the sentencing guidelines as part of the plea agreement call for a prison term of 10 years and one month or less. The sentencing was scheduled for December 19.

    G. was charged with fraud in Olympia’s sale of a portfolio of nonperforming mortgage loans to Credit Suisse First Boston using falsified loan histories. His case is pending, the U.S. Attorney’s office said.

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    26 COMMENTS

    1. i have learnt not to be quick to judge sombody. We dont know the circumstances nor the facts. The banking bussiness is very complicated and the feds came down hard on these guys. From the records it is a fact they didnt take 40 million but misrepresented some bad credit lenders.it is also a fact that out of 13 loans only two defaulted.if the feds would come down on every mortgage company they would find these kinds of misreprentations in most of them.

    2. to moshe

      this is not an indictment he pleaded guilty to theft and fraud

      A former mortgage lender pleaded guilty today to conspiring to commit fraud in a $44 million theft of payoff proceeds for refinanced mortgage loans funded by Fannie Mae.

    3. I am not sure what Moshe Cohen read but the article clearly states they refinanced but never used the money to pay off the refinanced debt and it was THEM that failed to do Their job and THEY kept the money.

      By the way, this reads more like a conviction or admission, not an acusation.

    4. G is a Tzaddik of a guy. In general, there is still a chiyuv to be dan lekaf zechis – Ken zein what they may have done was maasim bechol yom in the industry and it is just that they were made an example.. It is shayach that G thought he could be moichel the tardines of payment when he didn’t report it to the swiss bank.. But still we have to pursue yoisher un emes

    5. I worked for the company and i could swear that mr. g did nothing wrong. what he did is common practice in the mortgage business and the reason they charged him was they thought he would have something on mr. p which he did not have

    6. What is wrong with you MORONS. Because it is “common practice” means not breaking the law? He pleaded GUILTY, he ADMITTED THAT HE DID THE CRIME NOW LET HIM DO THE TIME. Maasim bechol yom is no excuse if is against the law of the land. Or perhaps there is something here that I am not aware of, the laws of NY State and the United States do not apply to so called “Frum People”. NAME HIS NAME SO OTHER PEOPLE ARE NOT Ensnared by this THEIF. Call a Goniff what he is!!! These guys are the reason tens of thousands of people will loose there homes to foreclosure and rest of the HONEST people will now have to jump through hoops to get a mortage. Hope he sits for a long time.. Sorry for his family but he is by his own admission a GONIFF.

    7. There is no way not paying off the refinanced debt is commonplace. It is the worst type of fraud.What happened to the bank holding the original unpaid note who do you think they would go after the mortgage was unpaid for months? I wondor what took long to chatch these fellows. How sick of these feleons to bring shame upon Klal Yisrael and the Torah community. Nebach on them and their families.

    8. I personally know a victim, he was an innocent kollel yungerman who unknowingly had 3 loans out without his knowledge. the 4th time he went to refinance, he decided to use a different broker & upon credit check he was informed. he went back to this defendant who told him it was a mistake & it was all paid off in a week.

      in fairness to the defendant, I don’t think anyone suffered a loss here, bec although the funds were misapproriated, payments were being made & I believe eventually paid off.

    9. To 11:21 u are such a self hating jew do u understand what it means to sit in jail, u sound like an intelegent gye is this y poeple are forclosing u klotz?, freddie & fannie r the reason can u trust your 5yr old to drive a car? the same hear u don’t just give loans if poeple won’t Be able to pay got it klotz rusheh????

    10. Can someone explain me – if the original loan was not paid off why didn’t Fannie realize that they receive the pay-off and how could Fannie wire money on the new loan until the original loan? Where was the Title company that insures title on the transactions and the pay-off?

      Something very fishy here.

      I am in the real estate business and it just doesn’t make sense!!

    11. comparing G & P is comparing apples to oranges. end of story. I hope G gets off easy, his case is still pending & the charges are far less serious. The feds were using G to get to P, & P plead guilty- hopefully now that the feds got what they wanted they’ll walk away & put this thing behind them.

      while I have serious differences with P on many counts- I think ppl should be aware that at the end of the day- not fannie mae nor any of the borrowers had a loss of money. his intention never was to run off with the funds- & he never did.

    12. If they could bail out the entire mortgage business, how come they forced these people to admit stealing? The real amopunt of stealing from our pockets was done by Fannie Mae and Mac They allowed 100 BILLION to go down. But Olympia followed their example and now they have to sit?!

    13. Bottom line, he used the money to invest in other things. If those investments had gone sour, he would have gone from an illegal borrower to a GOnif and he would have taken the homeowners credit worthiness down with him. This is not a Tzaddik. This is a Gonif anyway you cut it. He can form a shul jand a Bais Din in whatever facility he is going to and have a nice minyam of people like him.

    14. Aaron, true I do not know the particulars of the charges against G or that they are diffrent from P.’s. However, in the last several years I have seen horrific loans extended to people who had no business borrowing the funds. Some Lenders regularly took clear advantage of consumers. Generally, the fraud is done by manipulating data to qualify a borrower while charging junk fees that cover non-existent services. However not to pay the original loan? Even to ‘borrow’ the funds before paying it off is still unacceptable and is brazen in nature. To take folks for $44,000,000.00 goes far beyond predatory lending practices.

      P. Pleading guilty deserves some compassion for fessing up but . . .

      Manning up after getting caught still does not bring honor to Klal Yisrael.

      Though it is a cheap swipe maybe before the bans are issued against internet, music etc. . . there should be a ban on illegal business practices. Maybe a Hechsher on how Money is earned?

    15. P pled guilty to stealing $44 million. Whether it was repaid or not, he stole it in the first place.

      G is accused of falsifying the payment history on loans sold to a third party. Misrepresenting the payment history of loans resulted in loans being sold that might have been unsalable or loans sold for higher prices than they might otherwise have achieved.

      True, the case is atill pending and we should not judge until it is resolved, but G is accused of theft and misrepresentation. This isn’t a case of unpaid parking tickets.

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