Indictment Handed Down for Mortgage Kickback Scam

Allison Tussey —  May 29, 2012 — Leave a comment

Michael J. Smith, 31, Springfield, Pennsylvania, was charged by indictment with participating in a mortgage fraud conspiracy that caused losses of over $600,000.

Specifically, Smith is charged with one count of conspiracy to commit wire fraud, two counts of wire fraud, one count of money laundering, and forfeiture. According to the indictment, Smith, who was a mortgage broker at the time, conspired with John C. Lucidi, Jr. and Eric Maratea, both of whom are charged elsewhere, as well as numerous other individuals, in a scheme to buy properties at inflated prices so that buyers could receive kickbacks of tens of thousands of dollars.

Smith was one of the alleged buyers. The indictment charges that the kickbacks were not disclosed to the mortgage lenders, that the defendant applied for mortgages for himself, and that he helped others apply for mortgages using false information. The indictment further alleges that the individuals who purchased properties from defendant Smith at inflated prices made few or no mortgage payments, causing the mortgages to go into default and forcing the lenders to sell the properties at a fraction of the unpaid principal balance to recover some of their losses.

If convicted of all charges, Smith faces a maximum possible sentence of 55 years in prison, a three year period of supervised release, a $1 million fine or a fine of $750,000 plus up to twice the amount of the criminally derived property involved in the money laundering transactions, and a $400 special assessment.

United States Attorney Zane David Memeger announced the charges.

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, and the United States Secret Service. It is being prosecuted by Assistant United States Attorney Nancy E. Potts.

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Allison Tussey

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