Three senior executives at a New York mortgage lender were arrested Tuesday morning and charged with misappropriating $9 million from warehouse lines of credit meant to be used to fund mortgages.
According to the U.S. Attorney’s Office for the Eastern District of New York, Edward Bohm, Edward Sypher, Jr., and Matthew Voss, who are senior executives at Vanguard Funding, were charged with conspiracy to commit wire and bank fraud for allegedly misusing the warehouse funds to pay for personal expenses and compensation.
The government also alleges that the execs used the money to repay earlier fraudulently obtained loans.
Per the complaint, which was unsealed on Tuesday, Voss is Vanguard’s chief operating officer, Sypher is the company’s chief financial officer, and Bohm is the president of sales.
The complaint states that between August 2016 and March 2017, Voss, Sypher and Bohm engaged in a scheme where they obtained warehouse lines of credit from various lenders, including Santander Bank, Bankunited, and Northpointe Bank, which were supposed to be used to fund mortgages for the Vanguard’s customers.
But instead of funding others’ mortgages, Voss, Sypher and Bohm allegedly used the money from the warehouse lenders to pay personal expenses and compensation and to pay off loans they had previously obtained with fraudulent loan submissions for improper purposes.
According to Vanguard’s website, the company is based in Long Island, New York and is licensed to loan in California, Connecticut, Florida, Georgia, Massachusetts, Maryland, North Carolina, New Jersey, New York, Pennsylvania, and Texas.
According to the complaint, an agent from the Federal Bureau of Investigation stated that Bohm and Sypher were both recorded discussing their roles in the scheme.
In one recording, Bohm said that the trio would avoid criminal charges because the targets of their scheme were lenders, not the public. “At the end of the day, the s--- we did wasn't to the public,” Bohm is alleged to have said in the recording.
Additionally, Sypher was recorded during a meeting in the Vanguard offices this year stating that his role in the company meant that he would be not be charged if the alleged scheme was uncovered.
“I’m a W-2 employee. I don’t pull strings in this f------ thing,” Sypher allegedly said.
During that same meeting, Sypher allegedly told a co-conspirator: “You and I never had any communication on any of this s---. Ever. Ever. Okay? Outside of the normal course of business. None. So, we're not going to f------ jail.”
According to the complaint, investigators have identified $8.9 million of fraudulently obtained, and subsequently misused, loans thus far.
“As alleged, the defendants sought short-term loans from financial institutions that served as a repository for lenders,” FBI Assistant Director-in-Charge William Sweeney said.
“They then allegedly took the money, which is typically intended for borrowers looking to purchase a home, and used it for their own personal gain,” Sweeney continued. “Today’s charges are proof of our continued determination to root out those whose business practices attempt to harm the financial integrity of banks and financial institutions that facilitate homeownership.”
If convicted, Voss, Sypher and Bohm face a statutory maximum of 30 years' imprisonment for bank fraud conspiracy and 20 years’ imprisonment for wire fraud conspiracy.
“As alleged, the defendants – executives of a mortgage lender – defrauded banks into lending them money by stating that the money would fund new mortgages or refinance existing ones,” Bridget Rohde, the acting U.S. attorney for the Eastern District of New York, said. “We will continue to address dishonesty in the mortgage industry whether the victims are financial institutions, investors, or homeowners, as it ultimately hurts all of us as a community.”