Jeff McGrue, 51, Tacoma, Washington, was been found guilty of federal fraud charges for running a scheme that defrauded the owners of distressed homes by promising to delay or prevent foreclosure through a program that supposedly used notes backed by Treasury bonds to pay off mortgages.
McGrue was found guilty late Friday, January 21, 2011, by a federal jury of four counts of mail fraud and four counts of passing fictitious instruments to lenders and loan servicers. When he is sentenced, McGrue will face a statutory maximum penalty of 180 years in federal prison. United States District Judge Otis D. Wright II, who presided over the trial, has not yet scheduled a sentencing date.
The evidence presented during a four-day trial in United States District Court showed that McGrue orchestrated the foreclosure rescue scheme from the fall of 2007 through the fall of 2008 through a company he called “Gateway International.” McGrue worked with two others – Gerald Guidry, who owned a company called My Debt Solutions, and Ronald Morgan, who owned a company called Omnipoint – to defraud homeowners by promising to delay or prevent foreclosures and to pay-off delinquent mortgages in exchange for the homeowners making payments and transferring title to Gateway International.
McGrue and the others identified homeowners facing foreclosure or who were “upside-down” on their mortgages. Relying on a network of “consultants,” many of whom were real estate agents, McGrue recruited these homeowners into his “Gateway Program.” Through the Gateway Program, McGrue and the others falsely told homeowners that, if they paid an enrollment fee and monthly rent and signed over title of their homes to Gateway, McGrue would use “bonded promissory notes” purportedly drawn on a U.S. Treasury Department account to pay off their mortgages, thereby stopping foreclosure proceedings. During the course of the scheme, McGrue sent more than $50 million worth of the bogus notes to lenders. The homeowners were falsely told that lenders were legally required to accept the notes, that they would be able to buy their homes back from Gateway at a discount, and that they would receive up to $25,000, even if they chose not to re-purchase their houses.
In reality, McGrue did not own any bonds and did not have a U.S. Treasury Department account. Nor could he have the type of account described to homeowners because the Treasury Department does not maintain accounts that can be used to make payments to third parties.
McGrue and his co-schemers enrolled at least 250 victims in the “Gateway Program,” but McGrue did not save a single home. McGrue collected at least $800,000 in the form of enrollment fees and rent from these victims. The evidence at trial showed that McGrue signed bogus documents to make it appear the outstanding mortgages had been paid off so he could re-sell the properties.
Guidry, 44, Lancaster, California, pleaded guilty in 2010 to conspiracy and making false statements. He faces a statutory maximum sentence of 10 years in federal prison when he is sentenced by Judge Wright on April 11, 2011.
Morgan, 52, Sumner, Washington, pleaded guilty last year to conspiracy. He faces a statutory maximum sentence of five years when he is sentenced by Judge Wright on March 2, 2011.
A fourth defendant charged as a result of the investigation, John-Pierre Rivera, Los Angeles, California, participated in part of the scheme with McGrue. Rivera pleaded guilty last year to tax evasion. Rivera is scheduled to be sentenced by Judge Wright on February 28, 2011, at which time he faces a statutory maximum sentence of five years in federal prison.
The investigation into this mortgage foreclosure scheme was conducted by the Federal Bureau of Investigation.