Ex-LO sentenced in Chicago-area reverse mortgage scheme

Another ex-loan originator in a reverse mortgage scheme that cost elderly African-American Chicago-area homeowners millions of dollars is going to prison.

Gary Bohn, 59, was sentenced Wednesday to 1-and-a-half years in prison for his role in the wider fraud, according to Law360 which reported the sentencing. The former Illinois-based LO with American Fidelity Financial Services had pleaded guilty to helping facilitate a scheme to scam homeowners out of their reverse mortgage proceeds. 

Other co-conspirators have also pleaded guilty, including ringleader Mark Steven Diamond, who was sentenced in January to 17 years in prison. Diamond, also a former originator, worked with brokers and an appraisal management company in taking funds from 17 homeowners to pay for shoddy or nonexistent home repairs, resulting in $6 million in damages. 

Beginning in 2006, Diamond and others tricked property owners into believing they were signing documents to start supposed repair work, while Bohn submitted loan documentation to lenders on behalf of the unlicensed Diamond. Defendants pocketed the loan proceeds and often did not perform any repair work whatsoever. 

In 2013, the Department of Housing and Urban Development limited the cash that could be paid out to reverse borrowers. Bohn told co-conspirators they could skirt that rule as it didn't limit the amount of money that could be paid at closing to pay off a mechanics lien. 

"Bohn's decision to tell Diamond and Fefferman how to avoid the HUD rules was not a slip of the tongue or an innocuous conversation," wrote prosecutors in a sentencing memorandum this month, referring to another co-conspirator. 

Feds asked for a 28-month sentence, while Bohn requested three years of probation in his sentencing memo. While the former LO was facing up to 30 years in prison for his fraud charges, prosecutors gave him credit for immediately cooperating with investigators, including wearing a recording device on several occasions. 

Bohn in his sentencing memo said he regretted the scheme, and that he's already made $20,000 of over $300,000 in restitution payments. An attorney for Bohn didn't return a request for comment this week. 

An Illinois regulator revoked Bohn's mortgage loan originator license last July, after he pleaded guilty to fraud months earlier. He and two other co-conspirators, who have pleaded guilty but have not yet been sentenced, were charged in 2017. 

The Trump administration today says it's placing a greater emphasis on rooting out fraud, including rolling out a mortgage tip line and stepping up the Federal Housing Finance Agency's Suspended Counterparties Program. Feds have also pestered President Trump's political foes with mortgage fraud accusations, including indicting New York Attorney General Letitia James last week.