The owner of a California mortgage banking firm is facing criminal charges for allegedly defrauding Ally Financial Inc. on a $10 million warehouse line of credit.
A criminal information was filed Friday in Philadelphia federal court against Steven Pitchersky, the U.S. Department of Justice announced. An information is filed by a prosecutor, whereas an indictment is filed by a grand jury.
Pitchersky operated Nationwide Mortgage Concepts as a licensed mortgage lender from September 2003 until January 2011, according to court documents.
The California-based company originated first mortgages in more than 40 states. Business was generated through direct mail.
Nationwide was approved to originate loans insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs.
When Pitchersky applied for a warehouse line from Ally in June 2008, he allegedly claimed to have a $10 million warehouse line already in place with a company named MPL.
But MPL was actually owned by Pitchersky, according to the government. He is accused of providing Ally with a fake MPL contact and phone number that actually went to his own mobile phone. He carried on the charade for three years.
Ally, which previously did business as GMAC Bank, provided Nationwide with a $10 million warehouse line-of-credit. Thousands of loans were funded on the warehouse line from August 2009 until January 2011.
Most of the loans financed on the Ally line were also purchased by the Detroit-based firm.
However, instead of paying off the mortgages being refinanced, Pitchersky allegedly had the funds immediately wired to a bank account in California and used the funds for other purposes.
He was able to do this through Hanover Settlement Inc. in Hanover, Pa. — a title company he owned. He allegedly misrepresented to Ally on multiple occasions, however, that he did not own Hanover Settlement.
In order to conceal the unpaid debt, Pitchersky is accused of making the regular monthly payments to the original lenders.
In all, Ally allegedly advanced $5.3 million to pay off 23 mortgages — though the payoffs were never made.
Ally discovered the scam in January 2011.
In addition to the FBI and the inspector general for VA, the case was investigated by the Office of the Special Inspector General for the Troubled Asset Relief Program — or SIGTARP — because of more than $16 billion in TARP funds received by Ally Bank in 2008 and 2009.
Pitchersky faces up to two decades in prison if he is convicted.
