News

Title Company Owner Sentenced for Wire Fraud in Scheme to Divert over $3 Million Intended to Pay off Previous Mortgages


Made Monthly Mortgage Payments to Conceal Theft of Escrow Funds

FOR IMMEDIATE RELEASE
October 25, 2011

Baltimore, Maryland - U.S. District Judge Ellen L. Hollander sentenced Michael A. Gmeinwieser, age 38, of Severn, Maryland, today to 41 months in prison followed by three years of supervised release for wire fraud in a scheme to divert over $3 million in settlement funds intended to pay off the previous mortgage on the properties to himself and his company. Judge Hollander also ordered Gmeinwieser to pay restitution of $3,041,497.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.

According to Gmeinwieser’s plea, he was the sole owner of Innovative Title LLC (“Innovative”) located in Odenton, Maryland, and was responsible for preparing settlement statements, issuing title insurance, disbursing mortgage proceeds and other funds, and ensuring that relevant paperwork was properly completed for real estate closings. Gmeinwieser arranged real estate purchase or refinancing transactions that entailed temporarily depositing funds from a mortgage lender into Innovative’s escrow account to pay off the lien secured against the property by a prior lender.

From 2005 to 2009, instead of transferring the funds held in escrow to the prior lender as promised, Gmeinwieser diverted the funds to other uses for himself and Innovative. Gmeinwieser’s misappropriation of funds occurred during real estate transactions involving third party borrowers as well as transactions in which he refinanced mortgages secured by properties he owned. After carrying out refinancing transactions involving third party borrowers, Gmeinwieser made monthly mortgage payments on the borrower’s behalf in an effort to decrease the likelihood that the borrower would discover that their original loan had not been paid in full as agreed.

The losses to the six lending institutions that distributed mortgage loans on the basis of Gmeinwieser’s false promises amounted to $3,041,497.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage-Fraud/index.html.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

United States Attorney Rod J. Rosenstein thanked Assistant U.S. Attorney Martin J. Clarke, who prosecuted the case.


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