Finally- here's some more info- note $136 million in restitution due. Apparently the judge didn't go along with the plea agreement that called for a 12 1/2 year term [from another news story].
A no justice for Fraudella?
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A Montclair man was sentenced Thursday to 14 years in prison for his role in orchestrating the $136 million fraud scheme that bankrupted Pine Brook, New Jersey-based U.S. Mortgage Corp. and its subsidiary, CU National Mortgage, U.S. Attorney Paul J. Fishman announced.
Michael J. McGrath, Jr., 47, the former president and controlling shareholder of U.S. Mortgage, previously pleaded guilty to one count of mail and wire fraud conspiracy and one count of money laundering.
The sentence was handed down Thursday by U.S. District Judge Katharine S. Hayden in Newark federal court.
According to documents filed in court, McGrath conspired to fraudulently sell Fannie Mae hundreds of loans belonging to various credit unions from 2002 to Jan. 27, 2009.
Other members of the conspiracy included U.S. Mortgage’s chief financial officer and its servicing manager, Leroy Hayden. McGrath directed Leroy Hayden—who provided numerous reports to credit unions falsely stating that loans that had been sold were still in the credit unions’ portfolios—to falsify records to conceal the fraudulent sales.
McGrath admitted that he devised the scheme to prop up U.S. Mortgage, and that he used the proceeds to fund U.S. Mortgage’s operations, his personal investments, and investments he made on U.S. Mortgage’s behalf.
The pace of the fraudulent sales increased during 2008 and early 2009. On Jan. 27, 2009, dozens of law enforcement agents executed a search warrant at U.S. Mortgage and CU National’s Pine Brook headquarters. In the following weeks, U.S. Mortgage and CU National commenced bankruptcy proceedings. Hundreds of U.S. Mortgage employees lost their jobs as a result.
Hayden, 47, of East Stroudsburg, Pa., pleaded guilty before Judge Hayden to one count of wire fraud conspiracy. He is currently scheduled to be sentenced on March 24, 2011.
In addition to the prison term, Judge Hayden sentenced McGrath to three years of supervised release. McGrath also consented to forfeiture of the proceeds of his crimes and $14 million of his assets that the government has seized or frozen. The restitution order is expected to require McGrath to pay more than $136 million in restitution to his victims. |
