Finally, all the doughnuts have paid off. A real estate agent turns you on to a property investor that needs a loan officer to work with the many buyers for his properites. Years later, the U.S. government interupts your lunch and sends you to prison. This is the story of Jerome Mayne.
Like a frail lamb amidst hungry wolves, Mayne told the following tale to a group of executives that police mortgage fraud at their respective companies. The group was attending the Mortgage Fraud Detection and Prevention Conference, sponsored by the National Home Equity Mortgage Association.
Mayne grew up on a farm in a small town in Minnesota, attended college in Minnesota, then moved to Los Angeles to attend UCLA. While working as a litigation paralegal at an L.A. firm, Mayne said he was persuaded by a friend to go to work as an originator for inbound calls at Countrywide Funding in Pasadena.
After a couple years, Mayne said he moved back to Minnesota and joined Norwest Mortgage as a street loan originator with a focus on community lending, where he had to go out and hustle up business. He claims he received an award for selling the most community lending loans through the third quarter of 1993.
Mayne said he focused on Realtor-referred business.
His nightmare began when his best agent referred him a real estate investor. The investor, Mayne said, was flipping real estate. Phony documents were used to qualify buyers.
“None of his borrowers ever came in with any documentation,” Mayne said, and he noted this should have been a red flag. One buyer didn’t know his work address or what his income was. After Mayne advised the investor that the borrower would need to earn $13.75 to qualify for the property in question, “I got those ($13.75 hourly) paystubs the next day.”
Mayne noted that the fraud was never blatant. “At the time, I wasn’t thinking at all that he needs to get fake buyers approved,” he said. “I still believed, that if you’re buying low and selling high, that’s great.”
“During the eight months I worked with these individuals, I have to say that I kind of knew.” Mayne said that he began justifying his inaction by saying to himself, “I suppose the underwriter is gonna check that out; they can find the stuff, it’s not my job.”
While he had never met the investor, Mayne said that he (and his wife) developed a relationship with him over the course of many phone calls. Mayne even purchased one property and sold it to a buyer referred by the investor. In return for providing the buyer, the investor shared in half the profit. The property in that transaction was purchased for $25,000 by Mayne and appraised at about $57,000. Mayne suggested the lender’s staff appraiser may have been in collusion with the investor. He said he later learned that every document in that buyer’s loan file was false. Mayne was both the seller and the loan officer in the transaction.
Mayne said not long after that transaction, his boss questioned him about his relationship with the investor. Following that conversation, he left the company immediately and went to work at another company that offered community lending. He said he then obtained his real estate license and began buying and selling houses through his own company. While he said he wasn’t the loan officer in those transactions, protests from the Association of Community Organizations for Reform Now — or ACORN — over the level of profit he earned in the transactions convinced him to open his own mortgage brokerage and get out of real estate.
With a high school buddy as a partner, Mayne says he built the mortgage company up to 10 employees within 2 years. “I loved my job.”
During a lunch with his chiropractor on December 18, 1998, Mayne received a phone call. “Hi, this is Bob Canada, I’m with the FBI, I’ll be taking you into custody today,” he recalled.
He said the FBI “came and got me,” handcuffed him, and took him before a magistrate within an hour. As he looked up, he recalled the magistrate saying, “Mr. Mayne, how do you plead to the fraud charges brought against you by the United States of America.”
While he initially plead “not guilty,” his attorney ultimately convinced him to plead guilty.
A week after telling his partner about the charges, his partner said he had taken all of the employees and started a new company. Mayne sold his company shortly thereafter for $20,000, all of which went to his attorney.
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His mother drove him to prison. His prison term was uneventful, and he said he made the best of the time. He befriended a drug smuggler while behind bars. Comments from his presentation — seemingly written for mortgage loan originators and not the crowd of fraud unit personnel in attendance — appeared to sometimes seek empathy from the very people whose jobs it was to help send people like Mayne to prison. Mayne was previously scheduled to speak at the National Association of Mortgage Brokers’ upcoming annual conference. He said the group cancelled his presentation because of an expected strong media presence. He expressed some dissatisfaction over the fact that he can no longer originate loans, and now does stand up comedy in addition to giving his fraud presentation to other groups. |
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Jerome Mayne
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