A California mortgage broker made fake loans against homes without the knowledge of the property owners, then sold those loans on the secondary market multiple times.
Business was good for Laurence Seidenfeld. The 61-year-old broker-owner of CHL Mortgage Inc. of San Ramon, Calif., had recently done $13 million in loans, making a cool million dollars in the process.
Problem is the government says Seidenfeld’s gains are ill-gotten and he could be spending the rest of his life in prison. He could also end up paying that million bucks he made in fines.
A federal grand jury U.S. District Court for the Northern District of California in San Francisco has indicted Seidenfeld on four counts of bank fraud.
According to the indictment, Seidenfeld used phony documents to defraud four financial institutions out of more than $13 million. He then allegedly double sold the loans to warehouse and secondary lenders simultaneously without the knowledge of the institutions.
Seidenfeld used his knowledge and experience in the mortgage industry to pull off the scam, prosecutors allege.
“During the commission of the offenses charged …Seidenfeld abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense,” the indictment states.
In a written statement issued by the U.S. Attorney’s office in San Francisco prosecutors said a criminal complaint filed in connection with the case alleges that Seidenfeld engaged in bank fraud by fraudulently obtaining mortgage loans on property without the owners’ consent or knowledge.
“Those mortgage loans were then sold multiple times to various warehouse banks, lenders and investors without their knowledge that the loans were fraudulently obtained,” prosecutors said in the statement.
Prosecutors allege that several consumers either financed or refinanced mortgages on their residences through Seidenfeld’s company, CHL.
Some time later they received letters from the secondary lenders and investors concerning subsequent loans or second mortgages on their property, prosecutors said.
“However, no applications for those fraudulent loans had been made by the property owners,” prosecutors said. “Upon review of the signatures on the loan applications, it was determined that those signatures were forged.”
According to the indictment, four lenders were burned for a total of more than $13 million: Gateway, $6.3 million; Aurora Loan Services Inc., $1.7 million; First Collateral, $2.7 million; and First Horizon Home Loan Corp., $2.3 million.
None of the lenders responded to MortgageDaily.com’s requests for statements.
“Seidenfeld derived more than $1 million in gross receipts from…financial institutions as a result of the offenses,” according to the indictment.
Seidenfeld’s lawyer could not be reached to comment. He was being held on a no-bail warrant.
He faces 30 years in prison, a $1 million fine and restitution.
“The prosecution is the result of a one month investigation by agents of the FBI and investigators with the Contra Costa District Attorney’s office,” prosecutors said.
