Former Lend America exec Michael Ashley gets three years in prison
Former Lend America executive Michael Ashley was sentenced to three years in prison for his actions that led to the implosion of the once-high-flying Melville, N.Y.-based mortgage lender.
Besides the prison time, Ashley was ordered to pay $49 million in restitution and forfeit $800,000.
Judge Joseph Bianco of the U.S. District Court for the Eastern District of New York reduced Ashley's potential sentence after prosecutors credited Ashley's cooperation in other cases following his guilty plea, which was made in 2011.
Besides his activities in the mortgage industry, Ashley was a leading driver on the funny car drag racing circuit. On at least one occasion, his car — decked out in Lend America colors — was parked in front of the entrance to a Melville hotel where the New York Association of Mortgage Brokers was meeting.
However, Ashley's personal troubles started much earlier, with a 1993 guilty plea to three counts of conspiracy to commit wire fraud while working for Liberty Mortgage Banking of Long Island.
While not listed as the owner of Lend America (likely because of those past legal troubles), he was the company's public face, appearing in infomercials. In 2008, Lend America originated $1.36 billion, double its prior year and was on pace to double that when the government stepped in.
The end for Lend America started in October 2009 when the government sued the company — which also did business as Ideal Mortgage Bankers — seeking an injunction to halt its FHA lending, accusing it of fraud involving $14 million of originations. Initially, a federal judge denied the injunction, but in November 2009, the FHA suspended Lend America and the company promptly closed its doors.
Among the allegations the federal government investigated was that the company failed to pay off the existing first lien after a refinance.
In March 2010, Lend America and Ashley entered into an agreement with the government on the civil case that effectively barred him from the mortgage business, although at that time he did not admit liability.