Former JPMorgan Chase Banker To Serve Six Months For Taking Bribes

Posted by Patrick Barnard on June 03, 2015 No Comments
Categories : Residential Mortgage

Former JPMorgan Chase banker Lynda Sanabria will serve six months in prison followed by six months of home confinement for accepting hundreds of thousands of dollars in bribes in return for selling mortgage loans to her preferred customers on the secondary market, the FBI reports.

Sanabria, who pleaded guilty in October 2014, is one of seven defendants named in the case, according to an FBI press release. Authorities say she used her position and influence at Chase to ensure that her preferred customers won their bids to purchase the mortgage loans.

One of those preferred customers was Israel Hechter, owner of San Diego-based mortgage investment firms Ocean 18 and Note Tracker Corp. As per the release, Sanabria would provide Hechter with confidential information about competitors' bids and about the loans Chase offered for sale in exchange for payments of up to $300 per loan. Over time, these payments totaled at least $210,000, authorities say.

By 2008, Hechter stopped reporting the illegal payments to the Internal Revenue Service, and Sanabria stopped paying taxes on the illegal income, authorities say. Hechter later referred to the payments as birthday gifts or consulting fees in order to disguise the fact that he was paying for influence over Sanabria's decisions at Chase.

Hechter, who pleaded guilty in September 2014, admitted that he paid $1 million in bribes to Sanabria and other bankers at GMAC Mortgage and National City Bank.

In order to ensure that Hechter's bids were successful, the bankers corrupted the process by altering bids, rejecting other bids, and erasing or ignoring bids from qualified competitors. They also rigged the bidding process by supplying Hechter with confidential information about prices and competing bids, authorities say.

Robert Moreno, of GMAC, was one of the other bankers to receive bribes from Hechter. He pleaded guilty in October 2014 and admitted that he accepted more than $1 million in bribes from Hechter and other GMAC customers, including Ben Keisari, who also pleaded guilty to participating in the bribery scheme.

After purchasing the mortgages from the various financial institutions, Hechter pooled the loans and sold shares of the pools to investors, usually friends and family members, according to the FBI release. More specifically, he sold shares to his father, Zeev Hechter, his brother, Amir Hechter, and his employee, Jack Prober.

After purchasing the loans, Ocean 18 would service them and collect monthly payments from the borrowers, or would initiate foreclosure proceedings when the borrowers defaulted, authorities say. The investors made money when borrowers made payments, sold the properties, or after foreclosure and re-sale.

Zeev Hechter, Amir Hechter and Prober have each pleaded guilty and admitted their involvement in the scheme. Zeev Hechter was recently sentenced to six months in custody, a $50,000 fine and $165,000 in restitution, while Amir Hechter was recently sentenced to 18 months in prison for his role and ordered to pay a $25,000 fine and restitution of $63,474.

Israel Hechter, Robert Moreno and Jack Prober are each scheduled to be sentenced on August 3. Ben Keisari is scheduled for sentencing on Sept. 8.

‘These defendants manipulated a fragile market at a critical time in our country's efforts to recover from the financial crisis,’ says U.S. Attorney Laura Duffy, in the release. ‘We will continue to root out corporate corruption and vigorously pursue those who abuse their positions for personal profit.’

To read the full release, click here.

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