Multimillion-dollar mortgage fraud alleged in Oklahoma City
A federal grand jury indicted Ronald J. McCord, 69, of Oklahoma City, on charges of defrauding two banks, Fannie Mae, and others of millions of dollars, money laundering, and making a false statement to a financial institution, said Timothy J. Downing, U.S. attorney for the Western District of Oklahoma.
McCord is former president of First Mortgage Co. in Oklahoma City. The 24-count indictment alleges fraudulent conduct spanning about three years.
McCord is charged in seven counts with defrauding Spirit Bank and its subsidiary American Southwest Mortgage Corp., and Citizens State Bank and its subsidiary American Southwest Mortgage Funding Corp.
According to the indictment, in June 2016, an independent audit revealed McCord sold more than $14.1 million in Spirit/Mortgage Corp. and Citizens/Funding Corp. loans “out of trust” by failing to repay Spirit/Mortgage Corp. when certain Spirit/Mortgage-initiated loans were refinanced or otherwise paid off. At the time of the discovery, First Mortgage carried outstanding balances of about $200 million on its Spirit/Mortgage Corp. line of credit and about $140 million on its Citizens/Funding Corp. line of credit.
Further internal review revealed McCord misappropriated about $40 million in loans from the banks and their mortgage arms by using warehouse lines of credit to: obtain mortgage loans, selling the loans to Fannie Mae, then resubmitting the loan documents to get more money from the lines of credit; refinance the resulting loans without repaying the original loans; fund loans to borrowers, taking their payments, but never repaying Spirit/Mortgage Corp. and Citizens/Funding Corp.; obtain funds from the banks for loans that never closed, then failing to return the funds; and to “double fund” loans by obtaining funds from both banks to fund the same loans, according to the indictment.
The indictment further alleges that after the financial institutions learned of it, they terminated warehouse lending to First Mortgage and started requiring McCord to assign First Mortgage-funded mortgages to Spirit/Mortgage Corp. and Citizens/Funding Corp., to ensure that the title companies handling those mortgages sent payoffs directly to the banks.
According to a news release from the U.S. Attorney's Office, "Though McCord filed the assignments as required, his employees contacted the title companies handling the mortgages and directed payments to (First Mortgage), not Spirit/Mortgage Corp. and Citizens/Funding Corp. McCord continued to collect loan payoffs without repaying Spirit/Mortgage Corp. and Citizens/Funding Corp. He then signed releases on the assigned mortgages after receiving the payoffs, subjecting the properties to potential foreclosure should Spirit/Mortgage Corp. or Citizens/Funding Corp. try to collect payments on the mortgages, to which they held title."
The next count of the indictment alleges that after losing the lines of credit, McCord sought a new warehouse lender.
"In early 2017, McCord began negotiating with CapLOC LLC, a North Carolina-based mortgage lending business, and offered to sell (First Mortgage's) mortgage lending business in exchange for quick funding from CapLOC," the release states. "In the course of those negotiations, McCord made false statements and representations to obtain CapLOC funds. McCord then used the money to repay Spirit/Mortgage Corp. part of his outstanding $40,000,000 debt."
Finally, the indictment alleges in further counts that in 2017, First Mortgage serviced some 12,000 loans worth a total of about $1.8 billion for Fannie Mae, defrauding it by diverting escrow monies intended to pay homeowners’ taxes, insurance, principal, and interest to cover First Mortgage's operating expenses.
"As a result, McCord bounced checks to more than 60 taxing authorities, and borrowers throughout the Oklahoma City area and elsewhere missed making their tax payments," the press release said. The indictment further alleges that McCord "laundered the stolen escrow monies by using the funds to write himself checks, pay more than half the purchase price of his son’s $900,000 Oklahoma City home, and build a custom vacation home in Colorado."
McCord faces up to 30 years in prison and a fine of up to $1,000,000 on each count related to bank fraud and false statement to a financial institution. He also faces up to 10 years in prison and a $250,000 fine on each of the money laundering counts. The indictment also seeks forfeiture from McCord in the amount of the proceeds of the fraudulent schemes and in the amount of the property involved in the offenses.
This case is the result of an investigation by the Federal Housing Finance Agency's Office of the Inspector General, Federal Deposit Insurance Corp.'s Office of Inspector General, and the FBI's Oklahoma City Field Office. It is being prosecuted by Assistant U.S. Attorney Julia E. Barry.