Three Execs Charged With Fraud
Wed Jun 12, 1:47 PM ET
DETROIT (AP) - Three executives who presided over the $250 million collapse of MCA Financial Corp. were indicted for alleged securities fraud.
Chief executive Patrick Quinlan Sr., chief operating officer Lee Wells and John O'Leary, a senior vice president for the mortgage company, were charged Tuesday with conspiracy, making false statements to the Securities and Exchange Commission ( news - web sites) and mail, wire, and bank fraud.
The company was swamped by bad mortgage loans and placed into bankruptcy in 1999. Investors, including the Policemen and Firemen Retirement System of Detroit, lost an estimated $250 million.
"I've seen retirees who have lost their entire retirement and people who have had significant changes in their lives because of this," investor attorney Laurence Schultz said.
According to the federal indictment, the executives and others fraudulently sold investments in mortgages and land contracts that MCA had assembled into investment pools.
MCA allegedly misrepresented how earlier pools performed, inflated the value of mortgages and land contracts, and misappropriated some assets, the indictment said. MCA also allegedly misrepresented its financial condition in SEC filings.
Attorney Neil Fink, who is representing Quinlan, did not immediately return a call for comment.
If convicted, the defendants face up to five years in prison and a $250,000 fine on each count of conspiracy, mail fraud and lying to the SEC. They face up to 30 years and a $1 million fine on each count of wire or bank fraud.
They also could be ordered to pay restitution.
Four other MCA officers previously pleaded guilty to federal fraud charges |
