The former CEO of a loan servicing company has pleaded guilty today over a scheme to defraud a major lender out of more than $8m.
Earl Gross, the former president and CEO of Nevada-based U.S. Mortgage, pleaded guilty to one count of bank fraud in a scheme that saw the company withhold more than $8m in loan payoffs due to Wells Fargo. Gross' company was contracted by the lender to collect monthly mortgage payments from borrowers, and forward the proceeds to Wells Fargo. In the event that borrowers paid off a loan, U.S. Mortgage was to remit the full payoff amount to Wells Fargo.
Instead, Gross and U.S. Mortgage submitted fraudulent reports to the lender indicating that borrowers who had paid off their loans were continuing to make monthly payments. Rather than remit the full amount of the loan payoffs to Wells Fargo, U.S. Mortgage continued to send only the monthly payment will retaining the difference.
Gross, 75, is due to be sentenced on September 19, and could face as much as 30 years in prison. According to a Las Vegas NBC affiliate, Gross' defense attorney will seek a lighter sentence accounting for Gross' age and health.