Ex-PinnFund Chief Gets 10 Yrs for Fraud

Former subprime chief executive Michael J. Fanghella was sentenced to 10 years in prison Monday for his role in the collapse of PinnFund USA, a San Diego-based mortgage banker.Prosecutors said that investors in PinnFund lost about $224 million and that Mr. Fanghella and others were essentially running a Ponzi scheme at the company. Under a plea arrangement, he will serve the 10 years without being eligible for parole. PinnFund originated subprime loans and sold them in the secondary market to investors, including Finance America, Saxon, and Residential Funding Corp. PinnFund was closed in March 2001. At one point it had 20 branches and employed 200 people. Prosecutors said Mr. Fanghella hid operating losses at the mortgage banker and transferred more than $100 million of investor money to himself to live a lavish lifestyle. Investigators said the former CEO spent at least $10 million of investor funds on Kelly Cook, a one-time girlfriend and pornographic film star known as Kelly Jaye. He also used company money to fund a $120,000 New Year's Eve party in New York for 15 people. (See the Feb. 10 issue of National Mortgage News for complete details.)