Man jailed for 14 years for £84m mortgage fraud

The former president of a New Jersey-based mortgage company has been sentenced to 14 years in prison for his part in an £84m fraud scheme.

The defendant, Michael McGrath, sold Fannie Mae hundreds of loans belonging to credit unions. He then sent false reports to the credit unions falsely stating that the loans were still in the unions’ portfolios.

McGrath operated the scheme from early 2002 for seven years. In June 2009, he pleaded guilty to two counts of conspiracy, including one count of wire fraud and one count of money laundering, reported Reuters.

He admitted in court that he had conspired with several colleagues from broker firm US Mortgages Corp over a five-year period, to fraudulently sell the credit union loans.

The proceeds from the scheme were used by McGrath for personal investments and to resolve his company’s cash flow problems created by losses on investments in mortgage-backed securities.

At a hearing on 24 February, McGrath looked set to face 30 years in prison under federal guidelines, however, his plea agreement called for a term as short as 12 years, his lawyer John Vazquez reported.

He said: “McGrath expressed extreme remorse and has done everything he could to mitigate the harm, including helping the credit union and Fannie Mae recover more than £8m so far.”

On his release from prison, McGrath will face three years of supervision. The US government, which froze £9m in his assets, fined McGrath more than £84m for restitution to his victims.