Title Agent Sentenced for Failing to Pay Off Mortgages
Gary Pierce, 44, Edgewater, Maryland, was sentenced by U.S. District Judge Catherine C. Blake to six years in prison, followed by three years of supervised release, for conspiracy to commit wire fraud in connection with a five year scheme to divert or hold mortgage payoff funds from clients' closings on 17 Maryland properties. Judge Blake also ordered Pierce to pay restitution of $4,174,044.41.
Co-defendant Todd R. Bettin, 42, Crofton, Maryland, pleaded guilty to wire fraud in connection with the same scheme.According to their plea agreements, Pierce owned and managed At Home Settlements, LCC, Gambrills, Maryland. Bettin was the assistant manager of At Home Mortgage, also owned by Pierce and located at the same office as At Home Settlements. At Home Settlementsprovided settlement services and sold title insurance policies to clients who were buying homes or refinancing existing properties.
In 2007, Bettin refinanced the mortgage on his home. Pierce acted as the settlement agent. Rather than paying off the original mortgage as required, Bettin kept the payoff amount and never informed the original lender that he had refinanced the property. Also in 2007, Pierce obtained a mortgage loan on a property in Edgewarter, Mayland, that he did not own. Bettin acted as the loan officer on the transaction. Bettin and Pierce created false documents purporting to show that Pierce owned the property and provided those fraudulent documents to the lender. Bettin and Pierce used the funds obtained from the lender to perpetuate the scheme and each personally diverted $50,000 to themselves. The true owner of the property had no knowledge that documents had been created purporting to show that the property had been sold to Pierce.
Beginning in 2007, Pierce and Bettin diverted or held mortgage payoff funds from clients' closings for a matter of days, weeks and sometimes years. Pierce falsely represented on HUD-1 forms sent to the borrower's lender that the payoff was made, when in fact Pierce intended to divert the funds. Pierce and Bettin fabricated wire confirmation reports, which purported to be a bank record of the transfer, to include in loan files. These were created in advance of audits in order to deceive the title insurers.
Additionally, to forestall discovery by the lenders, Pierce and Bettin contacted the mortgage lender who should have been paid off and posed as the borrower/homeowner. Bettin would either create an on-line profile for the borrower and stop any mail from being sent to the borrower, or he would tell the lender that his, the borrower's, address had changed and he would re-direct the lender to send all correspondence to a post office box owned by Pierce. Bettin would then make monthly mortgage payments to the existing lender.
Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. With no delinquency in the account, the scheme went undetected.
Because the existing mortgages were not paid off, the liens against the property were not removed and clear title could not be passed to the new lender and borrower.
The total amount of diverted or otherwise improperly obtained funds totals $4,971,380.
Bettin faces a maximum sentence of 20 years in prison and a fine of $250,000. Judge Blake scheduled his sentencing for June 27, 2012, at 9:00 a.m.
The sentence and guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; Special Agent in Charge Kenneth R. Taylor, Jr. of the Housing and Urban Development Office of Inspector General - Office of Investigations; and Howard County Police Chief William McMahon.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage-Fraud/index.html.
This law enforcement action is part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
United States Attorney Rod J. Rosenstein thanked the FBI, HUD OIG and Howard County Police Department for their work in the investigation. Mr. Rosenstein commended Assistant U.S. Attorney Leo J. Wise, who is prosecuting the case.
source: Mortgage Fraud Blog