A Boulder, Colo., man pleaded guilty late last week to a nearly $32 million bank fraud scheme involving identity theft and fake residential mortgage loans that he sold to a Texas bank, federal law enforcement authorities said.
According to the U.S. Attorney’s office in Denver, Michael Scott Leslie, 57, pleaded guilty to federal bank fraud and aggravated identity theft charges. According to the U.S. Attorney, over a two-year period starting in October 2015, Leslie devised and executed a scheme to defraud the Texas bank (the name of which was not released by the U.S. Attorney in a press release) by selling the bank 144 fraudulent residential mortgage loans valued at $31.9 million. These loans, the U.S. Attorney asserted, were purportedly originated by one of Leslie’s companies, Montage Mortgage, and “closed” by Snowberry (another company he operated), which earned fees for the closing.
The loans were then presented and sold to the victim bank until Montage identified a final investor, the U.S. Attorney alleged. For these 144 fraudulent loans, that final investor was Mortgage Capital Management (MCM) – another company run by Leslie.
Leslie, the law enforcement authorities alleged, never disclosed to the victim bank that he operated MCM and Snowberry, or the fact that sales to investor MCM, even if they had been real, were not arms-length transactions.
However: The 144 residential mortgage loans sold to the victim bank were not, in fact, real loans, the U.S. Attorney said. The borrowers listed on these 144 fraudulent loans were real individuals, but they had no idea that their identities had been used as part of the sale of the fraudulent loans.
Law enforcement agencies said Leslie obtained the personal identifying information of the individuals through two methods: the borrowers had used Montage for legitimate residential real estate transactions which were properly executed and closed; or the borrowers had been solicited by Montage about refinancing their existing loans.
“In the case of refinance transactions, Montage secured permission from the borrowers to request credit scores and history from the major credit agencies,” the U.S. Attorney said. “After receipt of those credit scores, Montage often told these would-be refinance borrowers that they did not qualify for a refinance. Leslie then recycled the borrowers’ information, obtained through prior legitimate transactions or attempted refinances, to create and sell nearly $32 million of fraudulent loan packages.”
The Federal Deposit Insurance Corp.’s (FDIC) Office of Inspector General participated in the investigation.