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Employees at Citigroup Unit Indicted

9 Argent employees indicted in $13 million case

June 27, 2011

By staff

Nine former employees of a Citigroup Inc. subprime wholesale lending subsidiary -- including underwriters, account managers and supervisors -- are accused of colluding with appraisers, borrowers and mortgage brokers to fraudulently fund a hundred Ohio mortgages. The indictments are part of the biggest mortgage fraud case in U.S. history.

At the height of the mortgage industry meltdown, Citi acquired Argent Mortgage Co. from ACC Capital Holdings -- the parent of now-defunct Ameriquest Mortgage Co. The deal included $45 billion in mortgage servicing rights.

Argent was a subprime wholesale lender.

A news release last week from the prosecutor in Cuyahoga Country, Ohio, Bill Mason, indicated that 13 people were indicted over 100 allegedly fraudulent mortgages funded by Argent for $13 million. Nine of the defendants worked for Argent.

The county claims that the crimes were committed between 1999 and December 2008.

The loans in question didn't meet the lender's guidelines.

So the defendants allegedly falsified loan applications and fraudulently signed off on underwriting conditions, according to the statement.

"These loans were used on houses sold by or through Uri Gofman, who was indicted in the largest residential mortgage fraud case in the nation," the announcement stated.

The loans were underwritten at a processing center in Illinois. While the city location was not listed in the indictment, Argent operated centers in Rolling Meadows and Schaumberg.

Among Argent employees to be indicted were account managers Denise O'Brock Kobus, Angela Pasternak and Michael Scola; underwriters Erin Foley-Ottaviano, David Mongriotis, Kirk Porter and Dee Anne Shaw; and supervisors Terry Forbes and Gerald Steinkuehler.

Mortgage brokers previously charged in the case include Dale Adams, Nick Myles and James Sims. The brokers were allegedly coached by Argent account managers.

Also indicted were appraisers Linda Warner and Gerald Spuzzillo -- who also allegedly completed bad appraisals for former Washington Mutual Inc. subsidiary Long Beach Mortgage Co.

"These appraisers were hired by mortgage brokers and Uri Gofman to appraise properties Uri Gofman was selling," the county stated. "They inflated such appraisals to deceive Argent into believing that the properties were worth more than they actually were."

The State of Ohio, Cuyahoga County, vs. Karen Harris, Denise O’Brock, Mike Scola, James Sims, Linda Warner, Gerald Spuzzillo, Angela Pasternak, Terry Forbes, Gerald Stenikuehler, Dee Anne Shaw, David Mangriotis, Erin Foley, Kirk Porter, Defendants.
Case No. CR (Cuyahoga County Common Pleas Court.)

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