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Former Gateway Bank Head Pleads Guilty to Bank Fraud

NationalMortgageProfessional.com
May 13, 2015
In a relatively rare piece of pushback from a lender, Guild Mortgage Company is fighting back against charges from the U.S. Department of Justice (DOJ)

Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, has announced that Poppi Metaxas, former president and chief executive officer of TARP applicant Gateway Bank FSB has pleaded guilty to conspiracy to commit bank fraud for her role in defrauding the bank of more than $1.8 million in the aftermath of the financial crisis.

According to court filings and the facts presented at the plea hearing, between 2009 and 2010, Metaxas of Hillsborough, Calif. engaged in a scheme to defraud Gateway in connection with Gateway’s sale of non-performing assets and mortgage loans to three entities in exchange for $15 million. Specifically, Metaxas caused Gateway to enter into a sham loan agreement with Ideal Mortgage Bankers Ltd., d/b/a Lend America, a Long Island, N.Y.-based mortgage lender and Gateway’s largest mortgage lending client.

Metaxas and her co-conspirators, through a series of wire transfers, then used the proceeds of that sham loan to satisfy the 25 percent downpayment that the three entities owed to Gateway in connection with the sale of the non-performing assets and loans. To conceal the fraudulent “round trip” nature of the loan funds, Metaxas deceived the board of directors of Gateway and, in October 2009, she provided false testimony to bank regulators when asked about the source of the downpayment.

“While Gateway Bank was applying for TARP and being told by its federal banking regulator to raise capital and to reduce the amount of toxic assets on its books, bank president and CEO Poppi Metaxas orchestrated a fraudulent ‘round-trip’ transaction that masked the true health of the bank,” said Romero. “Metaxas’ criminal scheme involved ‘selling’ $15 million in non-performing assets to outside investors, secretly using bank money to fund the buyers’ 25 percent downpayment, and deceiving the board and the bank’s regulator about the source of the downpayment. Metaxas’ crime and cover up made the bank look healthier than it was while its TARP application was pending. SIGTARP and its law enforcement partners will ensure that justice is served for perpetrators of TARP-related crime.”

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