May 11, 2008

By Jessica Chung (View author info)
Copyright Financial Times Limited 2008

Two former executives of a now-defunct New York mortgage lender were on Thursday charged by US officials with fraud in schemes directed at Fannie Mae, the government-sponsored mortgage financier, and Credit Suisse First Boston. In an indictment filed on Thursday, prosecutors alleged that Leib Pinter, a former officer of Olympia Mortgage, which was based in Brooklyn, defrauded Fannie Mae of more than $44m by keeping money intended to pay off refinanced mortgages. Barry Goldstein, also formerly of Olympia, was accused of directing the creation of "dummy" loan histories for mortgage loans sold to Credit Suisse. The charges filed by the US attorney's office in Brooklyn come amid speculation by industry analysts that widespread fraud preceded the subprime mortgage collapse......Knowing that Credit Suisse may not buy the non-performing loans, Mr Goldstein allegedly told other Olympia employees to create "dummy" loan histories to make it appear as if all payments had been made on time. Credit Suisse purchased 12 of these loans. The various schemes lasted from about 1994 to 2004, when Olympia surrendered its mortgage lending licence, according to the indictment. Both men face a maximum of 30 years in prison if convicted, prosecutors said.

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