Joon H. Kim, Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Maria T. Vullo, Superintendent of the New York State Department of Financial Services (the “DFS”),announced today the unsealing of an Indictment charging JOHN REIMER with bank fraud and mortgage fraud in connection with his participation in a scheme to defraud banks of money intended for individuals seeking loans to purchase or refinance their homes. REIMER was arrested today in Boca Raton, Florida, and was presented in U.S. District Court for the Southern District of Florida earlier today before United States Magistrate Judge James M. Hopkins.
Acting U.S. Attorney Joon H. Kim said: “As alleged, John Reimer, vice president of a mortgage bank, defrauded several other financial institutions of more than $12 million. Reimer allegedly falsified documents, kept funding for mortgages that never closed, and even acquired funding multiple times for the same loans as part of the scheme. Fraud schemes that target money intended for home loans can taint the market for honest homebuyers seeking to secure mortgages. We will continue to work with our law enforcement and regulatory partners to ensure that schemes like the one charged here are stopped.”
FBI Assistant Director William F. Sweeney Jr. said: “As alleged, Reimer capitalized on his knowledge of the mortgage-lending industry to exploit its vulnerabilities, causing serious damage to a number of warehouse banks fronting him an advance for the loans his bank was in the business of providing. Mortgage fraud not only affects individual victims and institutions, it risks the overall stability of the housing market, accumulating losses across the board. The FBI continues to support partnerships within the mortgage industry and law enforcement as we work together to combat this serious crime.”
Financial Services Superintendent Maria T. Vullo said: “This defendant allegedly used his position and access as a banker to obtain millions of dollars in fraudulent loans. As regulator of New York’s Financial Services industry, the Department of Financial Services is proud to have assisted the United States Attorney’s Office for the Southern District of New York in bringing this defendant to justice.”
According to the allegations made in the Indictment:[1]
REIMER, who was the vice-president and comptroller of a mortgage lending institution (the “Mortgage Bank”), participated in a scheme to defraud several financial institutions (the “Warehouse Banks”) by causing the Warehouse Banks to provide funds to the Mortgage Bank, ostensibly to fund mortgage loans for residential properties, based on false and fraudulent documentation and representations made and provided by Reimer to the Warehouse Banks.
The Mortgage Bank was in the business of providing mortgage loans for residential properties (“Loans”). Pursuant to agreements, the Warehouse Banks advanced sums of money to the Mortgage Bank so that the Mortgage Bank could fund Loans (the “Warehouse Advances”). Once a Loan closed, the Mortgage Bank typically sold the loan to an investor and used the proceeds of the sale to re-pay the Warehouse Bank for the Warehouse Advance.
In order to obtain a Warehouse Advance for a particular loan, the Mortgage Bank was required, among other things, to provide the Warehouse Bank with certain documents and information about the Loan. In addition, the notes and mortgages executed by the residential mortgagors were provided to the Warehouse Banks as collateral for the Warehouse Advances. REIMER was responsible for providing the Warehouse Banks with the information and documents necessary to obtain the Warehouse Advances.
However, according to the Indictment, with respect to certain Loans, REIMER “double-pledged” residential properties by obtaining multiple Warehouse Advances from more than one Warehouse Bank to fund the same Loan, thus misleading each Warehouse Bank into believing that the Warehouse Advance it made to the Mortgage Bank was fully collateralized.
Moreover, according to the Indictment, with respect to certain Loans, REIMER falsely represented to the Warehouse Banks that the Loans were going to close imminently, when, in fact, such Loans were not imminently closing at the time the Warehouse Advances were made. In some cases, the Loans never closed, but the Mortgage Bank nevertheless retained the Warehouse Advances made for those particular Loans. In other cases, the Loans did close, but the Mortgage Bank used those Warehouse Advances to repay other Warehouse Advances.
According to the Indictment, in furtherance of the scheme, REIMER provided the Warehouse Banks with fraudulent documents, including mortgage notes on which REIMER falsified the signatures of the purported residential mortgagors.
According to the Indictment, from November 2008 through January 2009, REIMER used fraudulent misrepresentations to cause the Warehouse Banks to wire the Mortgage Company at least over $12 million.
REIMER, 60, of Boca Raton, Florida, is charged with one count of bank fraud and one count of wire fraud, each of which carries a maximum sentence of 30 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Kim thanked the FBI and DFS for their outstanding work on the investigation.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as allegations.
