James Delbert McConville has been sentenced to 93 months in prison, and ordered to pay more than $7 million in restitution for conspiring to commit mail and wire fraud related to approximately 80 fraudulent loan applications secured by real property in Escondido and San Marcos, Calif. McConville pleaded guilty on Jan. 25, 2012, to conspiracy to commit mail and wire fraud and to money laundering. According to the plea agreement, McConville admitted to conspiring with others from March 2008 through approximately 2009 to present fraudulent loan applications to lending institutions and to conceal from the lenders large payments he received as marketing fees. He admitted that members of the conspiracy paid straw buyers between $5,000-$10,000 for the use of their names and credit histories to obtain financing from lenders.
McConville also admitted that he received on average $150,000 per loan transaction as a marketing fee that was concealed from the lender approving the loan. McConville admitted that for each of the approximately 80 properties involved in the scheme, the escrow officer sent the lender a fraudulent settlement statement (HUD-1) that did not disclose the large marketing fee to the defendant. At the defendant’s direction, the marketing fee was paid directly to an individual associated with McConville or a corporate entity controlled by McConville.
McConville of Fremont, Calif., was indicted by a federal grand jury on May 13, 2010. He was charged with conspiracy to commit mail and wire fraud and money laundering.
The defendant’s conduct resulted in the approval of almost $20 million in fraudulent loans at a time when the press was dominated by the looming financial crisis caused in large part by the nationwide crash of the real estate market.
“Mr. McConville’s actions during our country’s financial crisis caused financial institutions to lose millions of dollars. What he thought would be a big payday for him, instead resulted in an extended prison stay,” said U.S. Attorney Melinda Haag. “Hopefully, today’s sentence sends a strong message to would-be fraudsters—you will be caught and you will be prosecuted to the fullest extent of the law.”
The sentence was handed down by U.S. District Court Judge Phyllis J. Hamilton following a guilty plea on two counts in violation of 18 U.S.C. § 1349 and 18 U.S.C. § 1957. Judge Hamilton also sentenced the defendant to a three-year period of supervised release and ordered restitution of more than $7 million. The defendant has been in custody since his arrest on June 18, 2010. He will remain in custody to serve his sentence.
“Mortgage fraud is a significant threat to our economy, to the stability of our nation’s housing market and to the peace of mind of millions of American homeowners,” said Marcus Williams, Special Agent in Charge of IRS Criminal Investigation. “This brazen and wide-ranging scheme defrauded banks and lenders of millions and enriched its participants. IRS-CI is committed to pursuing those who line their pockets with profits from these schemes.”