Corbett sues over $40 million mortgage Ponzi scheme
HARRISBURG, Pa. (Legal Newsline)--Pennsylvania Attorney General Tom Corbett filed a lawsuit Friday seeking restitution for hundreds of homeowners who said they were beguiled by a defunct mortgage company.
Wesley Snyder, his wife and employees of OPFM Inc. violated state consumer-protection laws when they victimized consumers in the Keystone State out of nearly $40 million in an extensive Ponzi scheme, the attorney general said in a statement.
"Consumers were drawn to OPFM and related companies with promises of lower interest rates, early pay-offs for their mortgages or higher returns for their investments," Corbett said.
"In reality, the money from new loans and new investments was used to pay-off older accounts, conceal company losses and support OPFM until the entire scheme collapsed in late 2007," Corbett added.
Corbett said he filed the lawsuit in response to more than 700 complaints his office received about the companies that sold low-interest "equity slide down" or "wraparound" mortgages.
The deals usually required consumers to borrow more than they needed to pay off their previous mortgages. They would give the difference to Snyder's firms to invest.
The attorney general alleges that Snyder never used the extra money to pay down mortgages and what little he invested yielded poor returns.
"Based on what consumers were told by the mortgage consultants, along with monthly statements and annual tax documents they were given, these victims believed their payments were being used to reduce the balance of their loans and earn money to keep their monthly payments low," Corbett said.
He added that "much of the money was actually being used to support company operating expenses and conceal millions of dollars in losses that were being generated by Wesley Snyder's companies."
Other defendants in the lawsuit are his wife and the firms' human resources manager, Sydney Snyder; Cheryl Ann Bennetch, of Denver, an office manager and accountant; Alicia Mary Waid, of Fleetwood, the office accountant; and five mortgage consultants.
In addition to restitution, the attorney general is seeking civil penalties, reimbursement for investigating and prosecuting the case.
Corbett is also seeking to bar the defendants from doing business in Pennsylvania until they pay the restitution, fines and attorney fees.
From Legal Newsline: Reach reporter Chris Rizo by e-mail at email@example.com.