A mortgage fraud scheme which resulted in about $24 million in losses to several banks came to a conclusion recently for two of the men involved in the crime. Two Florida men, the owner of a mortgage company and a bookkeeper, were sentenced for their roles.
Frank Garcia, the owner Federal Mortgage Guaranty Co., was sentenced to 87 months in prison and ordered to pay $10.6 million in restitution, including $2.5 million to M&T Bank in Buffalo, N.Y. The bank lost approximately $4.4 million in the scheme.
Garcia’s company was used to recruit straw buyers to obtain mortgages from M&T Bank and other institutions. He also misrepresented buyers’ assets and liability, did not record the liens on the properties, failed to pay off pre-existing liens on the properties and forged loan documents.
Ignacio Huergo, a bookkeeper who failed to report the mortgage fraud, was sentenced to two years’ probation with six months of home confinement and ordered to pay $736,254.25 restitution to M&T Bank for concealing the fraud. Huergo became aware of the fraud sometime between 2006 and 2008 and knew that its owner had manipulated the financial statements, which Huergo himself had drafted.
The financial statements were sent to financial institutions and indicated that the company had a minimum net worth of more than $1 million.
Cover Story: