|A former executive of Bayview Financial LP has been accused by federal prosecutors of defrauding secondary investors and earning nearly $3 million in the process.
Steven Gordon allegedly modified data on mortgage loan securitizations to inflate his incentive pay, according to an Information filing by the U.S. Attorney in U.S. District Court, Southern District of Florida in Miami.
Gordon was a senior salesperson, managing director and limited partner at Miami-based Bayview. As director of residential acquisitions, he oversaw loan purchases.
His compensation plan rewarded him when portfolio purchase prices were substantially less than budgeted. The pricing model considered credit scores, loan-to-value ratios and occupancy in addition to property types.
The Department of Justice alleges that Gordon altered some of the variables to boost his incentive pay from 1995 to 2006.
Bayview first discovered the alterations in March 2006.
"The alteration of data in this case primarily involved falsely increasing borrower credit scores, but also included to a lesser extent changes to property type and occupancy code and to an even more limited extent other variables," the company's President David Quint said in a July 2006 Securities and Exchange Commission filing.
Quint explained in the SEC filing that fraud by the fired employee impacted around 3 percent of Bayview's outstanding residential securitizations. The alterations weren't expected to have any material affect on the mortgage-backed securities.
In its Information filing, the government claims Gordon earned $2.8 million by fraudulently altering the credit data on more than 2,800 loans between 2001 and 2006.
Bayview noted in 2006 that it had repurchased $66 million in loans and that the SEC had opened up an inquiry into the activity.
Gordon could face 20 years in prison.
Executive Altered Entries
Standard & Poor's Ratings Services is joining federal regulators in reviewing the mortgage securitization operations of a Miami-based mortgage company after it revealed that a top sales employee had allegedly altered data on $100 million in securitized loans.
United States of America vs. Steven Gordon, Defendant.
Case No. 08-21103-CR-Jordan/McAliley Dec. 11, 2008 (U.S. District Court, Southern District of Florida in Miami)