Long Island Mortgage Banker Sentenced For Orchestrating $30 Million Bank Fraud Conspiracy

[nitpicker]

https://www.justice.gov/usao-edny/pr/long-island-mortgage-banker-sentenced-150-months-imprisonment-orchestrating-30-million

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

FOR IMMEDIATE RELEASE
Friday, March 24, 2017

Long Island Mortgage Banker Sentenced To 150 Months Imprisonment For Orchestrating $30 Million Bank Fraud Conspiracy

Defendant Inflated Mortgage Funding, Then Sold Toxic Loans to Investors

Earlier today, Aaron Wider, the former owner and Chief Executive Officer of the mortgage bank HTFC Corporation, was sentenced by United States District Judge Arthur D. Spatt to 150 months imprisonment. Following a four-week jury trial, Wider was convicted on January 25, 2016, of conspiracy to commit bank fraud for defrauding financial institutions out of over $30 million in mortgage proceeds. In addition, as part of the sentence the Court ordered Wider to pay $22,487,799 in forfeiture and restitution and, at the conclusion of his term of incarceration, serve five years’ supervised release.
(snip)

Between 2003 and 2008, Wider operated HTFC, a New York State licensed mortgage bank in Garden City, New York, which issued residential mortgages to borrowers. HTFC did not possess assets to fund these loans, but relied on funding from other banks and financial institutions, known as “warehouse lenders.” The warehouse lenders, in turn, relied on Wider and HTFC to ensure that home buyers were financially able to pay the mortgages and that the market value of the homes fully collateralized the loans.

Instead, Wider and his co-defendants engineered a series of same-day sham transactions to artificially inflate the prices of homes. Specifically, they contracted to buy homes in Nassau and Suffolk counties from innocent sellers at market prices. They then submitted fraudulent loan applications and appraisals to the warehouse lenders that nearly doubled the true sales prices of the homes. The defendants also inflated their own personal assets, used straw purchasers and sham trust entities, and concealed significant liabilities to get loan approval, typically obtaining proceeds for 80 to 100-percent more than the actual value of the homes.

HTFC sold each of its mortgages in the secondary market. When HTFC’s mortgages went into foreclosure beginning in 2007 and 2008, the secondary market investors only then discovered that the actual value of the collateral was far less than the amount borrowed for each home. As a result of this scheme, Wider was able to fraudulently obtain over $100 million in loan proceeds, causing over $30 million in losses to financial institutions.
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[shenmue]

1. Glad they got him