The president and founder of a now-defunct East Falmouth, Mass., mortgage company pleaded guilty Wednesday to charges that he defrauded the federal government out of about $2.5 million, according to a statement from U.S. Attorney Carmen Ortiz's office.
Robert Pena, 68, of Falmouth, who founded Mortgage Security Inc., pleaded guilty to one count of conspiracy and six counts of wire fraud. U.S. District Judge Mark L. Wolf scheduled sentencing for Jan. 5.
Beginning in 2011, Pena defrauded the Government National Mortgage Association, also known as Ginnie Mae, the government-run corporation that makes housing more affordable by injecting capital into the U.S. housing market, the statement says.
Pena deposited loan-payoff checks into bank accounts unknown to Ginnie Mae and then used that money for personal and business expenses, according to Ortiz's office. Pena also diverted borrowers' escrow funds and mortgage-insurance premiums for his own use. Pena took about $2.5 million, which Ginnie Mae then had to pay to the investors whose investments it had guaranteed.
Pena also tried to cover up his scheme by providing false reports to Ginnie Mae about the status of the loans Mortgage Security Inc. was servicing, according to the statement.
The state Division of Banks had issued a temporary cease-and-desist order against the East Falmouth mortgage company in 2013, banning it from doing business with Massachusetts customers.
Pena was arrested in August 2016, but his company was first investigated by the state in 2009. The Division of Banks filed a complaint making several charges, including failure to properly maintain books and records and failure to file required reports in a timely fashion. The company contested some of those charges, and after a hearing a consent order was issued.
In April 2013 another investigation was spurred by consumer complaints, and the state reported that "Mortgage Security has failed to demonstrate the financial responsibility, character, reputation, integrity and general fitness such as to command the confidence of the community and to warrant a determination that it will operate honestly, fairly, soundly and efficiently in the public interest, as a mortgage lender and mortgage broker."
Pena faces a maximum sentence of 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss.
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