New Jersey mortgage executive sentenced to 14 years in prison
The former president of New Jersey-based U.S. Mortgage Corp., and subsidiary CU National Mortgage, may spend up to 14 years in prison for his role in a $136-million loan scheme. As part of the scheme, the defendant Michael McGrath Jr., 47, sold Fannie Mae hundreds of loans belonging to credit unions. McGrath then sent false reports to the credit unions falsely stating that the loans were still in the unions' portfolios, according to a release from U.S. Attorney Paul Fishman out of New Jersey. McGrath operated the elaborate scheme from early 2002 to Jan. 27, 2009. He admitted to devising it to buoy U.S. Mortgage's financials, using the proceeds to fund the company's operations, personal investments and investments he made on his company's behalf. Prosecutors say the false reports were created to conceal the fraudulent sales to Fannie Mae. McGrath previously pleaded guilty to wire fraud conspiracy, mail fraud and one count of money laundering, according to U.S. Attorneys. In addition to McGrath, prosecutors accepted a guilty plea from Leroy Hayden, U.S. Mortgage's CFO. Hayden, who pleaded guilty to one count of wire fraud, will be sentenced on March. 24. Hayden is alleged to have provided numerous false reports to credit unions about the loans. Federal agents initiated a search warrant at US. Mortgage's headquarters in New Jersey two years ago. The scheme closed down the mortgage lending shop, resulting in hundreds of U.S. Mortgage employees losing their jobs. Once released from prison, McGrath will face three years of supervision. The government, which froze $14 million in his assets, fined McGrath more than $136 million for restitution to his victims. Write to Kerri Panchuk.