A US District judge sentenced a San Diego mortgage investor to 18 months in prison Friday.
Israel Hechter, owner of Ocean 18 LLC and Note Tracker Corporation, paid nearly $1 million in bribes to bank insiders at J.P. Morgan Chase Bank, GMAC Mortgage and National City Bank.
The bankers then arranged for Hechter to win bids to buy mortgage loans on the secondary market by manipulating and even erasing bids from qualified competitors. They also gave him confidential information.
Hechter gave GMAC Bank $330,000 in cash to hide the bribe from the IRS. He paid another $336,000 to GMAC for bribes disguised as legitimate fees paid for services.
GMAC banker Robert Moreno also pled guilty for taking more than $1 million in bribes from Hechter and another customer.
Lynda Sanabria, a J.P. Morgan Chase banker who sold mortgages on the secondary market, pled guilty as well for taking hundreds of thousands of dollars in bribes. In return she gave Hechter influence over Chase’s mortgage sales.
Hechter’s Brother and business partner Amir Hechter and his employee Jack Prober pled guilty to writing illegal checks to bankers in order to evade the IRS.
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After purchasing the mortgages Hechter pooled the loans and sold the shares to investors, usually friends or family.
Ocean 18 LLC would collect monthly payments from loans or from initiating foreclosure proceedings from borrowers who defrauded.
His investors made money when borrowers made payments, sold properties or after foreclosure. The mortgages were purchased on the secondary market after banks gave funds to borrowers.
Secondary purchasers provide primary lenders with additional capital and reduced credit risk and give borrowers greater access to loans.
The secondary mortgage market is more than $10 trillion and is essential to the economy.
Zeev Hechter, Hechter’s father who hand delivered cash to Robert Moreno, was sentenced to 6 months in custody and ordered to pay a $50,000 fine and restitution of $165,000.
Hechtor’s brother was sentenced to 18 months in prison, a $25,000 fine and restitution of $63,474.
Lynda Sanabria got 6 months in custody, followed by 6 months home confinement and must pay $40,420 in restitution.
Robert Moreno and Jack Prober are both scheduled to be sentenced in September and October.
