The former owner and chief of a New York mortgage banker has been sentenced to more than a dozen years in prison for selling fraudulent loans on the secondary market.
Aaron Wider was the owner and chief executive officer of HTFC Corp. The Garden City, New York-based organization was licensed as a mortgage bank.
HTFC funded residential loans that it originated by utilizing warehouse lenders. After the mortgages were funded, each of the loans were sold on the secondary market.
An announcement Friday from the U.S. Attorney’s Office for the Eastern District of New York alleges that Wider and other defendants operated a fraudulent scheme where they would contract to buy homes at market prices then created sham sales transactions for nearly double the price.
The Justice Department alleges that fraudulent loan applications and appraisals were utilized in the files. Straw purchasers and sham trust entities were also used in the transactions, while significant liabilities were concealed.
In addition, the defendants are accused of inflating their own personal assets.
When all was said and done, proceeds
of as much as double the actual value of the homes were derived from the “same-day sham transactions,” according to the Justice Department. More than $100 million in loan proceeds were generated.
The mortgages were sold on the secondary market. But by 2007, the loans began going into foreclosure — ultimately causing $30 million in losses to the financial institutions.
Wider, 50, was convicted on Jan. 25, 2016.
On Friday, the Justice Department announced that he was sentenced to 150 months in prison and ordered to pay $22.5 million in forfeiture and restitution.
“Wider’s scheme won him millions of dollars in profits and delivered a crushing blow to the financial institutions who became unwitting players in this game,” FBI Assistant Director in Charge William F. Sweeney stated in the news release. “But as we know, banks aren’t the only victims in these types of fraud-for-profits scams. A compromised banking system, which threatens both the stability of our economy and the safety of our assets, is a risk to us all.”
There was no indication of the outcome for Joseph Ferrara Jr., who was a co-defendant in the case. But four other co-defendants in the case reportedly previously pleaded guilty.
