Mortgages: Washington fraudster targeted distressed home owners

McGrue is facing up to 180 years in jail as a result of his conviction on four counts of mail fraud and four counts of passing fictitious instruments to lenders and loan servicing agents.

The evidence presented during a four-day trial in United States District Court showed that McGrue orchestrated the foreclosure rescue scheme from the autumn of 2007 until the end of autumn 2008 through a company he called "Gateway International." McGrue worked with two others – Gerald Guidry, who owned a company called My Debt Solutions, and Ronald Morgan, who owned a company called Omnipoint – to defraud homeowners by promising to delay or prevent foreclosures and to pay-off delinquent mortgages in exchange for the homeowners making payments and transferring title to Gateway International.

McGrue and the others identified homeowners facing foreclosure or who were "upside-down" on their mortgages. Relying on a network of "consultants," many of whom were real estate agents, McGrue recruited these homeowners into his "Gateway Program." Through the Gateway Program, McGrue and the others falsely told homeowners that, if they paid an enrollment fee and monthly rent and signed over title of their homes to Gateway, McGrue would use "bonded promissory notes" purportedly drawn on a U.S. Treasury Department account to pay off their mortgages, thereby stopping foreclosure proceedings. During the course of the scheme, McGrue sent more than USD50 million worth of the bogus notes to lenders. The homeowners were falsely told that lenders were legally required to accept the notes, that they would be able to buy their homes back from Gateway at a discount, and that they would receive up to USD25,000, even if they chose not to re-purchase their houses.

In reality, McGrue did not own any bonds and did not have a U.S. Treasury Department account. Nor could he have the type of account described to homeowners because the Treasury Department does not maintain accounts that can be used to make payments to third parties.

McGrue and his co-schemers enrolled at least 250 victims in the "Gateway Program," but McGrue did not save a single home. McGrue collected at least USD800,000 in the form of enrollment fees and rent from these victims. The evidence at trial showed that McGrue signed bogus documents to make it appear the outstanding mortgages had been paid off so he could re-sell the properties.

Guidry, a 44-year-old Lancaster resident, pleaded guilty last year to conspiracy and making false statements. He faces a statutory maximum sentence of 10 years in federal prison when he is sentenced by Judge Wright on 11 April 2011.

Morgan, a 52-year-old resident of Sumner, Washington, pleaded guilty last year to conspiracy to defraud. He faces a statutory maximum sentence of five years when he is sentenced by Judge Wright on 2 March.

A fourth defendant charged as a result of the investigation, John-Pierre Rivera, of Los Angeles, participated in part of the scheme with McGrue. Rivera pleaded guilty last year to tax evasion. Rivera is scheduled to be sentenced by Judge Wright on 28 February, at which time he faces a statutory maximum sentence of five years in federal prison.