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CitiMortgage Rep Bribed on Broker Loans

Nearly $20 million in mortgages got better than market terms

August 9, 2005

By PATRICK CROWLEY


Two California mortgage brokers have admitted in federal court to paying nearly $50,000 in bribes to a Missouri mortgage agent in a scheme to get favorable loan terms.

Richard Mehlinger, 44, and Terry Gale, 42, both of Los Angeles, have pleaded guilty to bribery charges, according to a written statement from the U.S. Attorney's office for the Eastern District of Missouri in St. Louis.

Also pleading guilty was Derek Fenton, 30, of Wentzville, Mo., who in addition to receiving $47,651 from Mehlinger and Gale was convicted of receiving total bribes of more than $70,000, Assistant U.S. Attorney Jeffrey Jensen said in the statement.

The defendants face up to 30 years in prison and fines of up to $1 million.

Jensen said that between November 2002 and June of last year Fenton worked for as a mortgage agent in the CitiMortgage office in Fenton, Mo. He was the primary contact for several mortgage brokers from across the country.

"In the typical scheme," Jensen said, "Fenton would allow these brokers to backdate their loan commitments so that the brokers' clients would receive more favorable terms from CitiMortgage.

"In exchange for the more favorable terms, Fenton accepted bribe payments from several of these mortgage brokers," he said.

Mehlinger and Gale worked for Delta Home Loans Inc., which does business as the Windsor Funding Group in Los Angeles. They paid Fenton $47,651 in 20 separate payments to get better terms than their competitors for their mortgage brokerage clients, Jensen said.

Fenton caused CitiMortgage to make 41 loans totaling nearly $20 million "on terms more favorable than permitted by CitiMortgage," Jensen said.

CitiMortgage lost $403,043 on the loans, he said.

Fenton also accepted smaller cash payments and other gifts as bribes from other mortgage brokers to bring the total to more than $70,000, Jensen said.

Restitution is mandatory under federal law.

Fenton is scheduled to be sentenced Oct. 27; Mehlinger and Gale are scheduled to be sentenced Nov. 3.


Patrick Crowley is a MortgageDaily.com feature journalist and blogger, and a reporter and columnist for The Cincinnati Enquirer. e-mail Patrick at: [email protected]

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