U.S. Mortgage Founder Pleads Guilty to $140MM Fraud

The founder and owner of U.S. Mortgage Corp. has pleaded guilty to a massive fraud that siphoned almost $140 million in funds from almost 30 credit union customers of the company's CU National Mortgage unit. Michael McGrath Jr. pleaded guilty late this past week to federal mail and wire fraud charges and money laundering, according to a report in The Credit Union Journal. Some of the money he took was invested in Fannie Mae common stock, the newspaper reported. Under his plea agreement, he faces between 12 to 20 years in prison when he's sentenced later this year. He also must pay restitution. However, authorities say they have only been able to track about $15 million of the missing money. CU National once provided origination and servicing for more than 120 credit unions. The company filed for bankruptcy in February as the fraud scheme unraveled and sold all of its mortgage servicing rights. Roughly 400 employees lost their jobs.