FARGO, N.D. — Two executives from a defunct Arizona mortgage lender pleaded guilty Friday in federal court to charges they swindled Bismarck-based BNC National Bank out of at least $26 million.
Scott Powers and David McMaster were charged with conspiracy to commit bank fraud and wire fraud. Powers was the CEO of American Mortgage Specialists Inc., or AMS, and McMaster was the company's vice president in charge of lending operations.
As part of their plea agreements, Powers and McMaster have agreed to forfeit $28.5 million, which includes proceeds from the fraud, prosecutors said in a statement.
Sentencing is scheduled for April 15. Powers and McMaster face up to 30 years in prison.
Authorities say AMS defrauded the bank by providing it with false financial statements and other information about the status of loans the bank had financed. A printout obtained by a BNC employee in April 2010 showed that few loans at AMS remained to be sold, according to court documents.
"The printout revealed that approximately $565,000 of loans remained to be sold, rather than the approximately $27 million of loans which were shown in BNC records as being held for sale to investors," a federal affidavit reads. "BNC ceased funding the loans, and AMS closed its operations."
McMaster's lawyer, James Belanger, said he is "one of the most decent clients" he has ever represented.
"He made mistakes and he is accepting responsibility for them. He has never sought to do otherwise," Belanger said in a statement. "Frankly, it is a privilege to be his lawyer."
Powers' attorney, Patrick Sampair, was not immediately return a message seeking comment.
Documents show that BNC's holding company received about $20 million from the federal Troubled Asset Relief Program, or TARP, in January 2009. About $17 million of that went to the bank. Investigators say BNC did not make its required TARP dividend payments to the government between February 2010 and December 2011.
LewisA posted at 11:52 pm on Mon, Oct 22, 2012.
If you are approached by a real estate professional who asks you to be part of a mortgage fraud scheme, report the perpetrators to the FBI. Remember, if it sounds too good to be true, it is likely a scam. Moreover, know that mortgage fraud is a prosecutable crime and against the law. If you suspect that you are being asked to break the law, at the very least, talk to a reputable real estate lawyer or the licensing authority in your state before moving forward with your plans on money advance.