A mortgage broker has pleaded guilty to helping a former executive of a Florida bank overcharge the banks borrowers. The two pocketed the difference while the bank wound up embroiled in lawsuits.
John Robert Miller has entered into a plea agreement for one count of wire fraud with the U.S. Attorney for the Middle District of Florida last week, according to court records. He faces up to five years in prison, a $250,000 fine and restitution of $1.5 million.
The U.S. attorney will recommend minimal time in prison if Miller continues to cooperate in the case.
Miller operated American Mortgage Link and Solutions Processing Inc. out of Tampa, Fla.
He is accused of conspiring with an unnamed mortgage lending executive vice president at Coast Bank of Florida, a federally insured bank.
The scheme was started in late 2004.
Borrowers who were brokered by American Mortgage to Coast were charged an additional 1 percent fee, which was placed in a bank account for Solutions. The bank executive, without Coast's knowledge, kept three-quarters of the additional fee while Miller kept one-quarter.
The proceeds were passed on to the bank executive by making payments from Solutions to the executive's creditors, family and charities. Miller also gave him an ATM card for the Solutions bank account.
In all, Miller paid out $1.1 million, which the executive used for travel, real estate and financial support for family members, among other things.
With such a high concentration of loans originated by Miller, the government claims Coast was put at risk.
Coast was sued last year by 175 borrowers who claim the bank was operating a flipping scam where they were solicited to invest in lots with no money down that would be developed and sold at a profit. But the borrowers claimed they were left with unimproved lots and unfinished homes after the builder -- Construction Compliance Inc. owned by Jesse Battle III -- stopped work on the homes in November 2006 and filed for bankruptcy in April 2007.
American Mortgage Link was also named in the lawsuit for extracting excessive fees, some of which were not disclosed. In all, Coast revealed 482 loans for $110 million were made to borrowers whose homes were built by the bankrupt builder.
In 2006, Coast took $21 million in allowances for loan losses on construction loans. The company wound up facing a lawsuit by shareholders.
In May 2008, 20 borrowers sued National City Mortgage, which Construction Compliance turned to for financing after leaving Coast. The borrowers claim National City turned a blind eye to overcharges and bad appraisals.
Regulators issued a cease-and-desist order against Coast in early 2007, criticizing its directors and management for "unsafe or unsound banking practices" in regard to its residential construction loan program.
United States of America v. John Robert Miller
Case No. 8:08-cr-0030-T30 TBM (U.S. District Court, Middle District of Florida, Tampa Division)