SAN DIEGO (CNS) - Sentencing is scheduled for Jan. 5 for the head of two San Diego-based mortgage investment firms for his guilty plea to paying $1 million in bribes to bank insiders to secure bids to purchase mortgage loans that were then sold on the secondary market.
Israel Hechter, owner of Ocean 18 LLC and Note Tracker Corp., admitted Friday in federal court to paying off workers at J.P. Morgan Chase, GMAC Mortgage, LLC, and National City Bank so they would favor him by altering some bids, rejecting others and erasing or ignoring still others from qualified competitors.
The bankers also rigged bidding by supplying Hechter, 47, with confidential information about prices and competing bids, according to prosecutors.
"Individuals and corrupt bank employees who attempt to tilt this playing field for their own advantage cannot be tolerated," Assistant U.S. Attorney Phillip Halpern told the court.
According to his plea agreement, Hechter and co-conspirators tried to cover up the bribes by pretending that they were legitimate commissions unrelated to the bankers' positions with the banks, and by using a phony "consulting agreement," a sham business and a corresponding bank account to disguise the illicit payments.
Many of the loans at issue were non-performing or distressed second mortgages. Hechter pooled them and sold shares to investors, usually friends and family members, according to the U.S. Attorney's Office in San Diego.
After purchase, Ocean 18 LLC would service the loans and collect monthly payments from the borrowers, or would initiate foreclosure proceedings when the borrowers defaulted. The investors made money when borrowers made payments, sold the properties, or after foreclosure and resale.
Hechter's 42-year-old brother, Amir, and business associate, Jack Prober, 56, pleaded guilty Wednesday to participating in the conspiracy. Both admitted writing personal checks to bankers to help them evade taxes on the illegal income.
The sibling co-defendants' father, 68-year-old Zeev Hechter, pleaded guilty Tuesday to taking part in the scheme by hand-delivering about $330,000 in cash to GMAC banker Robert Moreno. Moreno, 42, allegedly would meet with Zeev Hechter on New York City street corners and visit him at the latter's carwash to launder the bribes.
Amir Hechter, Zeev Hechter and Prober are also scheduled to be sentenced Jan. 5.
Moreno was arrested July 15 for his alleged role in the conspiracy. His trial has not been scheduled.
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