Mortgage Daily

Published On: May 24, 2006
Employee Arrested, Data At Large

Former Mortgage Lenders Network employee accused of extortion

May 3, 2006

By PATRICK CROWLEY

photo of Patrick Crowley
A former employee of a large wholesale mortgage lender has been arrested and charged with trying to extort nearly $7 million from the company.But authorities and Mortgage Lenders Network USA, based in Middletown, Conn., are concerned that the employee stole a computer containing sensitive information on customers.

Paul W. Schenkel, 36, was arrested by Middletown Police May 20 and charged with attempted larceny by extortion and computer crimes in the first degree, according to a written statement the police provided MortgageDaily.com.

Police obtained a warrant to search Schenkel’s home and seized computer files and other items from the house, including Schenkel’s personal computer. Police said they launched an investigation after receiving a tip from the company.

“Schenkel, a former employee, was trying to extort $6.9 million from the company,” police said in the statement. “Schenkel is suspected of removing computer files from the company without authorization or permission.”

Schenkel was released on a $250,000 bond and is scheduled to appear in court on May 30.

The company is saying little about the arrest, but it is cooperating with the investigation and is clearly concerned about the information Schenkel allegedly stole and has access to.

“Mortgage Lenders Network USA is aware of the press release distributed by the Middletown Police Department,” the company said in a statement provided to MortgageDaily.com in an e-mail from spokeswoman Lauren Carmody.

“In conjunction with the statements made in the press release (the company) is working with the authorities towards a resolution of the matter,” according to the statement.

A company lawyer and vice president, whose name was provided by police, did not return a phone call to comment.

Mortgage Lenders says on its corporate Web site that 2006 production goal is $12.1 billion. It says about 80 percent of its loans are subprime. The company said its servicing goal “is expected to grow to $15.6 billion with over 127,000 accounts” this year.

Police did not say how Schenkel was planning on allegedly trying to blackmail his former employer.

Thefts of computers and information on customers — including Social Security numbers, bank accounts and credit histories — has become a reoccurring problem in the mortgage industry.

A computer containing customer information is missing from Wells Fargo mortgage. The company said it was lost earlier this month while being shipped by a package delivery firm it has not identified. Customers have been notified.

And First Horizon Home Loans notified customers earlier this year that a computer containing similar information was stolen from an employee’s home in Oregon.

The companies said in both cases they have no reason to believe any information was used to steal or access customers’ identifies. The companies are also offering free credit monitoring to customers so they can detect if someone is trying to borrow money or establish accounts in their name.

RELATED:

Mortgage Company PCs Stolen
Pending mortgage loan applicants and existing borrowers of two major mortgage institutions were recently informed that personal computers containing their personal information were stolen.


Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: [email protected]

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