The complex scam involved nonexistent mortgage loans, fraudulent company, identity theft and forgery
Michael Scott Leslie had a sweet deal going, in which he sold nearly $32 million in mortgages to the same bank – without actually closing any mortgages. That is, until he got caught.
Leslie, owner of Montage Mortgage in Boulder, pleaded guilty last week to federal bank fraud and aggravated identity theft.
Federal prosecutors said that between 2015 and 2017, Leslie ran a complex scam on a Texas bank – a scam that involved nonexistent mortgage loans, fraudulent companies, forgery, and numerous cases of identity theft. All in all, Leslie sold the Texas bank 144 mortgages valued at more than $31.9 million.
The mortgages were purportedly originated by Montage Mortgage, and supposedly closed by Snowberry – another company owned by Leslie – which earned fees for the closing. The loans were then sold to the bank until Montage identified a final investor. In the case of the 144 fraudulent loans, that final investor was Mortgage Capital Management (MCM) – yet another Leslie-owned entity. Leslie never disclosed to the bank that MCM and Snowberry were his companies, and that the loans, even if legitimate, wouldn’t have been arms-length transactions.
But that wasn’t the only problem with those loans.
“The 144 residential mortgage loans sold to the victim bank were not, in fact, real loans,” the Justice Department said.
The borrowers listed on the phony loans were real people – but they had no idea that their identities were being used as part of an elaborate scam, federal authorities said. They had either used Montage Mortgage for legitimate real estate transactions, or had been solicited by Montage about refinancing their existing loans.
In the case of refinance transactions, Montage got permission from the borrowers to request credit scores and histories from the major credit-reporting agencies. After receiving that information, Montage often told the prospective borrowers that they didn’t qualify got a refi.
“Leslie then recycled the borrowers’ information, obtained through prior legitimate transactions or attempted refinances, to create and sell nearly $32 million of fraudulent loan packages,” the Justice Department said.
Leslie also forged signatures on closing documents and fabricated or altered credit reports and title documents. The phony real estate transactions were never filed with the counties in which the properties were located, and no liens were ever recorded. Leslie funneled the money through numerous bank accounts – both for his various companies and his own personal accounts – and engaged in a “Ponzi-like” scheme in which he used money from prior phony loans sold to the victim bank to fund new phony loans, which he then sold to the same bank.
When the scam was finally uncovered, the victim bank still had 12 fraudulent loan, valued at nearly $3.9 million, on its books – loans that it couldn’t, given that they didn’t actually exist, sell to any other investor.
