July 15, 11

NEWS / Washington State Man Sentenced to 25 Years for Orchestrating Foreclosure-Rescue Scheme

LOS ANGELES—A Tacoma, Washington man was sentenced today to 25 years in federal prison for running a scheme that defrauded owners of distressed Southern California homes by promising to prevent foreclosure through the paying off of their mortgages, but in reality doing no more than sending their lenders fake notes, totaling $55 million, that were supposedly backed by Treasury bonds.

Jeff McGrue, 51, who was found guilty by a federal jury in January 2011 of four counts of mail fraud and four counts of passing fictitious government instruments to lenders and loan servicers, faced a statutory maximum sentence of 180 years in custody.

At the sentencing hearing, United States District Judge Otis D. Wright, III, stated that the defendant intended to “bilk the financial institutions out of at least $55 million,” and he described defendant’s defrauding of the homeowners as “heartless.”

United States Attorney André Birotte Jr. stated: "Schemes targeting homeowners who are losing, or are in danger of losing, their homes to foreclosure prey upon the most vulnerable among us. The Department of Justice is working with its partners in law enforcement to aggressively combat these schemes. This sentence will send a strong message of deterrence to scam artists and other schemers who think they can steal from desperate, distressed homeowners and get away with it."

The evidence presented during a four-day trial in United States District Court showed that McGrue orchestrated the foreclosure-rescue scheme from the fall of 2007 through the fall of 2008 through a company he called “Gateway International.” McGrue worked with two others—Gerald Guidry, who owned a company called My Debt Solutions, and Ronald Morgan, who owned a company called Omnipoint—to defraud 250 Southern California homeowners by promising to delay or prevent foreclosures and to pay-off delinquent mortgages in exchange for the homeowners making payments and transferring title to Gateway International.

McGrue and the others identified homeowners who were facing foreclosure or who were “upside-down” on their mortgages. Relying on a network of “consultants,” many of whom were real estate agents, McGrue recruited these homeowners into his “Gateway Program.” Through the Gateway Program, McGrue and the others falsely told homeowners that, if they paid an enrollment fee and monthly rent and signed over title of their homes to Gateway, McGrue would use “bonded promissory notes” purportedly drawn on a U.S. Treasury Department account to pay off their mortgages, thereby stopping foreclosure proceedings. The homeowners were falsely told that lenders were legally required to accept the notes, that they would be able to buy their homes back from Gateway International at a discount, and that they would receive up to $25,000, even if they chose not to re-purchase their houses.

In reality, McGrue did not own any bonds and did not have a U.S. Treasury Department account. Nor could he have the type of account described to homeowners because the Treasury Department does not maintain accounts that can be used to make payments to third parties.

McGrue and his co-schemers enrolled more than 250 victims in the “Gateway Program,” but McGrue did not save a single home. McGrue collected approximately $1 million in the form of enrollment fees and rent from these victims. The evidence at trial showed that McGrue signed bogus documents to make it appear the victims’ outstanding mortgages had been paid off so he could re-sell the victims’ properties, which had been re-titled in Gateway’s name, to unsuspecting buyers.

Guidry, a 44-year-old Lancaster resident, pleaded guilty last year to conspiracy and making false statements. He faces a statutory maximum sentence of 10 years in federal prison when he is sentenced by Judge Wright on October 17.

Morgan, a 52-year-old resident of Sumner, Washington, pleaded guilty last year to conspiracy. He faces a statutory maximum sentence of five years when he is sentenced by Judge Wright on November 7.

A fourth defendant charged as a result of the investigation, John-Pierre Rivera, of Los Angeles, participated in part of the scheme with McGrue. Rivera pleaded guilty last year to tax evasion. Rivera is scheduled to be sentenced by Judge Wright on November 28, at which time he faces a statutory maximum sentence of five years in federal prison.

The investigation into this mortgage foreclosure scheme was conducted by the Federal Bureau of Investigation.

CONTACT: Assistant United States Attorney Evan J. Davis
Major Frauds Section
(213) 894-4850

Assistant United States Attorney Stephen I. Goorvitch
Major Frauds Section
(213) 894-2476

http://www.fbi.gov/losangeles/press-releases/2011/washington-state-man-sentenced-to-25-years-for-orchestrating-foreclosure-rescue-scheme

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