Keith G. Grubba, 42, was sentenced to five years and three months in federal prison and ordered to pay approximately $187 million in restitution to victims after pleading guilty to conspiracy to commit wire fraud, conspiracy to commit money laundering, tax evasion and making false statements to HUD.
Grubba was the president of PinnFund, Carlsbad, California. Authorities contend co-defendants Michael Fanghella and James Hillman promised 160 investors significant returns on over $300 million they invested in PinnFund to fund mortgage loans. The money was used to cover operating losses, pay executives and pay off previous investors – a classic Ponzi scheme. The scam was uncovered in March 2001.
Fanghella is currently serving a 10 year prison sentence and Hillman is awaiting trial. John Garitta, another top executive of PinnFund, plead guilty and is awaiting sentencing.
Rachel Dollar, the editor of Mortgage Fraud Blog is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors.