Massive Foreclosure Related Scam Pins down Montclair Man

Posted on July 2, 2009
Filed Under Foreclosure Homes | Leave a Comment

The machinations of a man from Montclair, Michael J. McGrath involving $139 billion led to the bankruptcy of a mortgage company in New Jersey. McGrath pleaded guilty to the charges of fraud. It led to the collapse of U.S. Mortgage Corporation and its auxiliary CU National Mortgage. This announcement was made by acting U.S. attorney Ralph J. Marra Jr.

As per the plea agreement the actual sentence that McGrath faces ranges between 140 to 240 months jail in federal prison. He would also have to compensate his victims. He has agreed to surrender to the government his bank as well as brokerage accounts together with his interest in his Hoboken property. The plea agreement is not binding on the Judge Hayden who can use his discretionary powers. McGrath has been released on $1 million bail. He has to stay confined to his house and be subjected to constant electronic monitoring.

McGrath said that from January 2004 to January 2009 he entered into a conspiracy with many others to sell loans of various credit unions and then use this money to fund mortgage dealings as well as his own individual investments together with those made on behalf of U.S. Mortgage. McGrath also said that the operations took off with fund diversion. This money should actually have been paid to the many credit unions for the mortgages they had made. CU had been authorized to sell these to Fannie Mae. McGrath admitted to holding back this money to help cash strapped U.S. Mortgage. The latter had suffered because of losing in the investments in mortgage supported securities he had done on behalf of the company. McGrath also said that when the financial health of U.S. Mortgage began to further slide he sold innumerable of these loans to Fannie Mae without letting the credit unions know about it.

Marra said, “This was truly a massive fraud, a giant shell game by McGrath. McGrath deftly and fraudulently moved these mortgage assets around and sold them while the institutional owners had no idea they no longer held the assets. The goal was to prop up his own company, which instead sunk deeper into trouble as his scheme grew larger and ultimately collapsed.”

McGrath undertook innumerable steps to cover his tracks like generating false reports for the credit unions. The latter were told that that the loans continued to remain in the portfolios of the bank whereas in reality these had been sold to Fannie Mae.

Popularity: 4% [?]

Related Tags

Nobody landed on this page from a search engine, yet!

Comments