The Department of Justice
filed a lawsuit against Robert S. Luce, founder and president of MDR Mortgage
, according to a complaint filed in the U.S. District Court for the Northern District of Illinois.
Luce is accused of leading his team to wrongly originate FHA-insured mortgage that later defaulted, leading the government to face millions of dollars in claims.
Luce was indicted in April 2005 on charges ranging from obstruction of justice, making false statements, and practicing mail/wire fraud.
Although he was under investigation and indictment, he continued to originate FHA-backed mortgage, the lawsuit states.
"Mortgage lenders who lie in order to reap the benefits of these insurance programs, as is alleged here, undermine the integrity of these programs and misuse taxpayer funds that are meant to support single family housing," said Department of Justice assistant attorney general Tony West.
Currently, HUD, which oversees the FHA program, is looking to pay more than $1.6 million in insurance claims to those hit by the 90 defaulted mortgages caused by MDR.
Write to Matthew Torres