Thursday, December 18, 2008
Principal Of Mortgage Securitizer Charged With Fraud
Steven Gordon, 49, Miami, Florida was indcited and charged with wire fraud in connection with a scheme to inflate the value of mortgage loans and increase his commission compensation.
Gordon was a principal at Bayview Financial, LP (Bayview Financial),a Coral Gables-based finance company that buys portfolios of loans from lending institutions. Bayview Financial pools these loans into newly formed business entities, called “special purpose entities,” and then issues securities backed by those loans to the investing public. During fiscal years 2006, 2005 and 2004, respectively, Bayview Financial and its affiliates securitized approximately $2.056 billion, $0.954 billion and $1.428 billion, in offerings of residential and commercial mortgage loans, including $1.989 billion, $0.884 billion and $1.243 billion of residential mortgage loans.
The Information alleges that defendant Gordon was a principal of Bayview Financial and held the title of “Director of Residential Acquisitions.” One of Gordon’s primary duties was to negotiate the purchase of thousands of loans for Bayview Financial’s mortgage securitization program. Gordon’s incentive compensation was based on his ability to buy those loans at a low cost.
The charges filed allege that Gordon defrauded Bayview Financial by altering credit information affecting the value of more than 2800 loans he acquired. According to the Information, Gordon falsified this credit data to increase his compensation, causing Bayview Financial to pay him more than $2.8 million in additional commissions. Some of the fraudulent credit data was incorporated into Bayview Financial’s securitization program.
U.S. Attorney Alex Acosta stated, “This case is an example of how an individual executive’s greed can harm our financial markets and our economy. We have learned the hard way that corporate and financial fraud harm us as much, if not more, than street crime. Whether it be mortgage fraud, securities fraud, or health care fraud, corporate crooks must be prosecuted and punished.”
FBI Special Agent in Charge Jonathan Solomon added, “The FBI considers crimes involving the mortgage and financial industries a top priority. This type of criminal activity is a contributing factor to the economic instability with which the country is now challenged. The FBI will continue to make every effort to identify and hold accountable those who engage in this type of illicit activity.”
Mr. Acosta commended the investigative efforts of the FBI and the Miami Regional Office of the Securities and Exchange Commission. Mr. Acosta also recognized Bayview Financial’s outstanding cooperation with this investigation. This matter is being handled by Assistant United States Attorney Ryan Dwight O’Quinn.
mortgage fraud
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Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
F. Jeffrey Miller Update - October 20, 2009
A hearing was held in Topeka, Kansas in front of Judge Julie Robinson. Miller is currently being held pending his sentencing which is set for December 22nd, 2009 at 9:00 a.m.. Steve Vanatta and Hallie Irvin, Miller's codefendants, will be sentenced at that time also.
Several motions were heard this week. One was a motion for Miller to be released pending his sentencing. Miller's attorney, Jeff Morris, argued that the court had dismmissed with predjudice the matter involving Miller's purchase of a commercial lawnmower, violating the court ordered monitoring agreement. He also argued that Miller was not a flight risk and should be released. This motion was denied.
Another motion heard by Judge Robinson was that of an escrow account containing proceeds from the sale of Miller's forfeited assets. This account has a balance of $143,000. Attorney Morris argued that his firm was due $100,000 for work done in the Miller matter, to date. The government argued that his 'un-itemized fees' were 'exhorbitant'. The balance of the funds, Morris argued, should be released to the Miller family to help pay for mounting household expenses.
The government argued that the 'Asset Forfeiture Provision' applies down to 'the last penny' and that 'the rights of the victims to made whole are of paramount immportance' and that no routine household expenses like Visa bills, are allowed.
Attorney Morris argues that there is more than enough assets to satisfy the jury's judgement of $2.65 million dollars. The government argues that the estimated value of his assets are only $1.4 million.
The government also stated that Miller has been paid dividends from a company Miller has an ownership interest in; Boreflex. From July, 2008 to present, Miller has been paid $330,509.30 from Boreflex, unbeknownst to the court appointed monitor.
Present in the courtroom was Todd Earnshaw. Earnshaw was indicted along with Miller and others in what is commonly referred to as 'Miller I'. That trial is scheduled to begin on January 11, 2010 in Topeka, Kansas.
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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. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
