Mortgage Broker Pleads Guilty To Fraud

In some respects, I should not be surprised. In hearing that a Houston-based mortgage broker had pleaded guilty two weeks ago to one count of bank fraud and one count of engaging in monetary transactions in property derived from specific unlawful activity, it was easy to chalk it up to just one more example of greed overtaking any form of rational thinking.

For me, however, this one cuts a little too close for comfort. The broker in question is Richard Bell, a former top-producing broker with Allied Home Mortgage Capital Corporation and for four years, one of my best customers. What makes the story all the more remarkable is that I, as a wholesale lender, never suspected him of anything remotely suspicious. In one case, I remember him calling me on a loan in process and out of the blue saying he needed to cancel the Gonzalez file. He just caught the borrower trying to pass off phony pay stubs and he did not want me to get stuck with a fraudulent deal. He went on to say that he called the local FBI field office and informed them of what happened. When I contacted the FBI office directly, I verified his story. From my perspective it was ultimate selfless act. He could have turned a blind eye, made his income and no one would have known. Instead, he saved me from what likely would have been a costly loan repurchase.

Over the next four years our relationship went well beyond the typical lender-broker relationship. While Richard did his residential loans through my company, he made big money in commercial development. From hospitals to restaurants, he became a mover and shaker in the Houston area. There were numerous articles in various Houston-area publications depicting him as a pillar in the community. One businesswoman went so far as to say that Houston is lucky to have Richard.

At one point in 2004, my wife and I spent a weekend with he and his wife, Joni, on their 65-foot yacht. At the time, it ranked as one of the most memorable trips in our 14 years of marriage. When I sold my interest in my company in late 2005, I seriously contemplated going into business with Richard and moving my family to Houston.

Hearing the news prompted me to dig deeper. After reading pages of information on a local Houston-area blog, it is clear that Richard was not your run of the mill scumbag. The reason they call them con artists is that not unlike other performers who practice their craft in seek of perfection, his trail of destruction left a wide and devastating trail. The stories that surfaced, from accusations of horrendous spousal abuse to a myriad of investors and local area residents that had been duped, the impact of his actions will be felt for years to come.

What strikes me as odd is that Richard was no dummy. After five years of extensive interaction, he was extremely savvy. Why would anyone with that level of intelligence take two Wells Fargo cashiers checks, one for $10 and the other $25, scan them, and use software to produce new checks totaling in excess of $350,000? He originally came from a banking environment, from the compliance side nonetheless. He knew that companies like Wells Fargo have extensive audit requirements and they will eventually figure this out.

He was originally charged with over 6 counts of bank fraud but struck a deal to reduce everything down to two charges. When sentencing comes in April, he could face upwards of 35 years in jail.

Was I lucky to have avoided the carnage of Richard Bell? It sure seems that way. Like other brokers before him, I could easily have been thrown under the proverbial fraudmobile, but was somehow spared. I have witnessed more than most when it comes to the greed and carnage of this industry and after a while you almost become immune to it. But after hearing this news, you will excuse me if my faith in humanity has become a little shaken.