Indictment Alleges Servicer Diversion of Borrower Payments

Rachel Dollar —  August 18, 2016 — Leave a comment

Robert Pena, 67, the president and founder of the now-defunct mortgage company, Mortgage Security, Inc. (MSI), a Falmouth, Massachusetts mortgage company was indicted on conspiracy and wire fraud charges in connection with and alleged scheme to defraud the Government National Mortgage Association (Ginnie Mae) out of nearly $3 million.

According to court documents, MSI was contracted with Ginnie Mae to pool eligible residential mortgage loans and then sell Ginnie Mae-backed mortgage bonds to investors.  MSI was responsible for servicing the loans in the pools it created, including collecting principal and interest payments from borrowers, as well as loan payoffs, and placing those funds into accounts held in trust by Ginnie Mae, which would ultimately pass them along to investors.  Among other things, Ginnie Mae required issuers like MSI to provide regular reports to Ginnie Mae concerning the status of the loans in the pools.

According to the indictment, beginning in 2011, Pena began diverting money that borrowers were sending to MSI.  Specifically, he is alleged to have deposited large-dollar, loan-payoff checks into secret accounts unknown to Ginnie Mae and then using those funds for his own personal and business uses.  Pena also diverted borrowers’ escrow funds and mortgage-insurance premiums for his own use.  In total, Pena took nearly $3 million, which Ginnie Mae then had to pay the investors whose investments it had guaranteed.  Pena also attempted to cover up his scheme by providing false reports to Ginnie Mae about the status of the loans MSI was servicing.

The charge of conspiracy provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss.  The charge of wire fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss

United States Attorney Carmen M. Ortiz; Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, Northeast Regional Office; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement.  The U.S. Attorney’s Office acknowledged the invaluable assistance of the U.S. Department of Veterans Affairs, Office of Inspector General, the U.S. Department of Agriculture, Office of Inspector General and the Falmouth Police Department.  The case is being prosecuted by Assistant U.S. Attorneys Eric P. Christofferson and Brian LaMacchia of Ortiz’s Economic Crimes Unit and Civil Division, respectively.

 

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Rachel Dollar

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