Four individuals have been indicted for engaging in a scheme to defraud Wilmington Trust Federal Savings Bank and Malvern Federal Savings Bank of at least $35.5 million.
According to the indictment, mortgage broker Bernadette Nicholas and her husband Dennis operated Nicholas Mortgage Company from a Newtown Square, Pa., home office. During their mortgage fraud scheme, the defendants intentionally misrepresented facts to Wilmington Trust Federal Savings Bank about their borrowers' income and assets, the potential rental income and accurate appraisals of properties in order to receive fraudulent loans for Pennsylvania properties.
The indictment also claims that both defendants falsified borrowers' tax returns and documents relating to the amount of the downpayments being made by the borrowers. They also allegedly forged borrowers' signatures on loan documents.
Another conspirator involved in this fraud scheme, Kevin McAllister, worked as a loan officer at Wilmington Trust, based in Delaware with five branch offices in Pennsylvania. McAllister allegedly helped the Nicholas's approve mortgage loans for borrowers who did not meet Wilmington Trust's criteria for income, assets, and credit scores, in return for bribes and kickbacks from the defendants. The brokers were able to get McAllister to approve more than $30 million in loans from the bank.
The brokers supposedly did not notify the Internal Revenue Service after receiving the money involved in this fraud scheme. The same goes for McAllister regarding his kickbacks for loans given out to clients who received properties from this fraudulent plan.
In another scheme to defraud loans from a bank, the brokers used Wayne Rosen to receive a $1.6 million loan from Paoli, Pa.-based Malvern Federal Savings Bank to complete the sale of an apartment building.
To acquire the loan, the Nicholas's allegedly falsified borrowers' income tax returns prior to submitting them and misrepresented the downpayment made by the borrowers on for the property on the loan document given to the bank.
Additionally, the three conspirators applied for a $3.5 million loan to refinance an existing loan that they had on a medical building. In order to influence the bank's actions, the three defendants allegedly prepared fraudulent leases that misrepresented the potential rental flow income of their medical building and caused these leases to be submitted to the bank.
If convicted, both the Nicholas's and McAllister each face sentences of 70 to 87 months in prison and a fine of up to nearly $60 million, while Rosen faces a sentencing range of 46 to 57 months in prison and a possible $3 million fine.
