Stephen M. Gunther, 40, Hertford, North Carolina, pled guilty in Norfolk, Virigina, federal court to wire fraud in connection with a scheme to defraud commercial mortgage lenders. Gunther entered his guilty plea before United States District Judge Raymond A. Jackson and is set to be sentenced on June 21, 2010.

Gunther is an attorney who has a law office in Virginia Beach, Va. According to court documents, between June and December 2006, Gunther acted as a settlement agent in connection with the closing of four residential real estate loans on local properties. The lenders were Fremont Investment & Loan, American Home Mortgage, Diversified Mortgage, and Baltimore American Mortgage Corporation. The settlement statements prepared and submitted by Gunther to the lenders did not accurately reflect the receipt and disbursement of closing and loan funds. Gunther violated the lenders' closing instructions by concealing agreements where he used his personal funds to pay closing costs on behalf of buyers, who were actually straw purchasers, and subsequently was reimbursed by a third party. In addition, Gunther disbursed proceeds to a third party instead of to the seller as required by the settlement statement.

In reliance on the settlement statements, the lenders made loans totaling approximately $978,500. The notes on the loans were subsequently purchased by other companies who sustained losses totaling approximately $210,000 when the loans on three of the four properties went into default and two were sold at foreclosure, with one sale pending.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement

The case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Alan M. Salsbury prosecuted the case for the United States.