Press Release
FORMER PRINCIPAL OF MORTGAGE SECURITIZER CHARGED WITH FRAUD IN CONNECTION WITH MORTGAGE-BACKED SECURITIES
December 11, 2008
FOR IMMEDIATE RELEASE
R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (“FBI”), announce the filing of a one-count Information charging defendant Steven Gordon, 49, of Miami, with wire fraud in connection with a scheme to inflate the value of mortgage loans and increase his commission compensation.
Gordon was a principal at Bayview Financial, LP (Bayview Financial),a Coral Gables-based finance company that buys portfolios of loans from lending institutions. Bayview Financial pools these loans into newly formed business entities, called “special purpose entities,” and then issues securities backed by those loans to the investing public. During fiscal years 2006, 2005 and 2004, respectively, Bayview Financial and its affiliates securitized approximately $2.056 billion, $0.954 billion and $1.428 billion, in offerings of residential and commercial mortgage loans, including $1.989 billion, $0.884 billion and $1.243 billion of residential mortgage loans.
The Information alleges that defendant Gordon was a principal of Bayview Financial and held the title of “Director of Residential Acquisitions.” One of Gordon’s primary duties was to negotiate the purchase of thousands of loans for Bayview Financial’s mortgage securitization program. Gordon’s incentive compensation was based on his ability to buy those loans at a low cost.
The charges filed today allege that Gordon defrauded Bayview Financial by altering credit information affecting the value of more than 2800 loans he acquired. According to the Information, Gordon falsified this credit data to increase his compensation, causing Bayview Financial to pay him more than $2.8 million in additional commissions. Some of the fraudulent credit data was incorporated into Bayview Financial’s securitization program.
U.S. Attorney Alex Acosta stated, “This case is an example of how an individual executive’s greed can harm our financial markets and our economy. We have learned the hard way that corporate and financial fraud harm us as much, if not more, than street crime. Whether it be mortgage fraud, securities fraud, or health care fraud, corporate crooks must be prosecuted and punished.”
FBI Special Agent in Charge Jonathan Solomon added, “The FBI considers crimes involving the mortgage and financial industries a top priority. This type of criminal activity is a contributing factor to the economic instability with which the country is now challenged. The FBI will continue to make every effort to identify and hold accountable those who engage in this type of illicit activity.”
Mr. Acosta commended the investigative efforts of the FBI and the Miami Regional Office of the Securities and Exchange Commission. Mr. Acosta also recognized Bayview Financial’s outstanding cooperation with this investigation. This matter is being handled by Assistant United States Attorney Ryan Dwight O’Quinn.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
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