A Copiague man was sentenced Friday to 12 ½ years in federal prison for conning banks out of more than $30 million in a mortgage scam over a six-year span.
Aaron Wider had been convicted of conspiracy to commit bank fraud last year following a month-long trial at Central Islip federal court.
“Wider’s scheme won him millions of dollars in profits and delivered a crushing blow to the financial institutions who became unwitting players in this game,” said William Sweeney, Jr., assistant director of the FBI’s New York field office. “But as we know, banks aren’t the only victims in these types of fraud-for-profits scams. A compromised banking system, which threatens both the stability of our economy and the safety of our assets, is a risk to us all.”
Authorities said the 50-year-old man, the owner and CEO of the Garden City-based mortgage bank HTFC Corp. from 2003 to ‘08, and his co-defendants engineered a series of sham transactions to artificially inflate the prices of homes in order to secure funding from other banks and financial institutions known as “warehouse lenders.”
Those lenders in turn relied on HTFC to ensure that the home buyers were financially able to pay the mortgages and that the homes were properly appraised, prosecutors said. But the fraudulent loan applications and appraisals to the warehouse lenders nearly doubled the true sales prices of the homes, according to investigators.
Wider and others also inflated their own personal assets, used straw purchasers and sham trust entities and concealed significant liabilities to get loan approval, authorities said. HTFC sold each of its mortgages in the secondary market, but it wasn’t until HTFC’s mortgages went into foreclosure beginning in ’07 and ’08 did investors discover that the actual value of the collateral was far less than the amount borrowed for each home, prosecutors said.
In addition to prison time, Judge Arthur Spatt also ordered Wider to serve five years of supervised release and pay $22,487,799 in forfeiture and restitution.