Man Gets 4 Years in Prison for Defrauding Warehouse Lender

Allison Tussey —  May 27, 2014 — Leave a comment

Steven Pitchersky, 65, Rancho Mirage, California, was sentenced to 51 months in prison for a scheme to defraud Ally Bank that resulted in losses to the bank of approximately $5.3 million. Pitchersky, who pleaded guilty to wire fraud on September 23, 2013, operated Nationwide Mortgage Concepts, a California mortgage lender.

As previously reported by Mortgage Fraud Blog, between August 2009 and January 2011, Ally was the warehouse lender for thousands of mortgage loans in which NMC borrowed from Ally’s warehouse line of credit to refinance first mortgages held by other financial institutions. Pitchersky made misrepresentations to Ally to secure the warehouse line of credit including his false representation that NMC had a current $10 million warehouse line of credit with a company named MPL. Pitchersky stated that the contact person for MPL was a man named “Rick Jay,” and he listed a phone number for Rick Jay. The phone number that was provided, however, was actually for Pitchersky’s cell phone, and MPL was the name of another business entity that Pitchersky ran. Over the next three years, Pitchersky represented to Ally multiple times that he had a warehouse lending relationship with this company.

Pitchersky used NMC’s $10 million warehouse line with Ally to obtain funds to refinance thousands of mortgages held by other banks for NMC customers. Ally required NMC to disburse funds through a third-party, commonly referred to as a title company. Pitchersky used a company called Hanover as the title company, but, unbeknownst to Ally, Pitchersky had created Hanover. This subterfuge allowed Pitchersky to have complete control over money NMC acquired from Ally’s warehouse line. Between December 2010 and January 2011, Ally advanced NMC approximately $5.3 million to pay off 23 first mortgages for NMC clients. NMC failed to use these funds to pay off these mortgages and instead used the money to pay off first mortgages for other customers. At the end of January 2011, Ally discovered that defendant and NMC had not used this money to pay off the 23 loans and ended the warehouse agreement with NMC.

The defendant was charged on August 2, 2013, and pled guilty on September 23, 2013, although the plea agreement remains under seal.

In addition to the prison term, U.S. District Court Judge John R. Padova ordered restitution in the amount of $3,242,888, five years of supervised release, and a $100 special assessment.

In total, $17.2 billion in federal taxpayer bailout funds were invested in GMAC Inc., since rebranded as Ally Financial Inc., through the U.S. Department of the Treasury Troubled Asset Relief Program (TARP). As of April 9, 2014, Treasury owned 17 percent of Ally Financial, and $4.1 billion of the TARP investment remained outstanding.

“Greed got the best of Pitchersky, and, for his crimes, he will spend the next 51 months in federal prison,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “Defrauding a recipient is the same as defrauding American taxpayers who funded TARP. Pitchersky drew down millions of dollars on a warehouse line of credit with Ally through lies and false pretenses, faking that he used Ally’s funds to pay off refinanced mortgages while, instead, he used the money in part to fund his luxurious lifestyle and extravagant art collection. SIGTARP and our law enforcement partners will bring justice to those committing crimes that threaten taxpayers’ TARP investments.”

The case was investigated by the Federal Bureau of Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program, and the Department of Veterans Affairs Office of Inspector General. It was prosecuted by Assistant United States Attorney David L. Axelrod.

Allison Tussey

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