A former sales executive at Washington Mutual Inc.’s subprime lending unit Long Beach Mortgage was convicted of fraud by a federal court jury, the U.S. said.
Joel Blanford, 44, was found guilty yesterday of six counts of mail fraud for his involvement in a scheme to falsify loan documents that earned him more than $1 million in commissions from 2003 to 2005, U.S. Attorney Benjamin Wagner in Sacramento, California, said in an e-mail.
Blanford paid a loan coordinator in cash and checks to falsify documents, provide false verification of borrowers’ employment or professional licensing status, and to turn a blind eye to fraudulent representations contained in loan applications and other documents submitted to Long Beach Mortgage, prosecutors said. His commissions were based on the number of loans the bank processed.
An earlier trial resulted in a hung jury. Sentencing is scheduled for Dec. 10. The maximum penalty for mail fraud affecting a financial institution is 30 years in prison and a fine of as much as $250,000, or twice the value of the gain or loss, whichever is greater.
Michael Cardoza, Blanford’s attorney, didn’t return a voice-mail message yesterday seeking comment about the verdict.
From 2003 to 2006, Washington Mutual and its Long Beach Mortgage unit increased mortgage securitizations from $4.6 billion to $29 billion, U.S. Senator Carl Levin, a Michigan Democrat, said in April 2010. In 2005, Long Beach was forced to buy back $875 million of non-performing loans from investors. An internal 2005 audit found that 83 percent of loans approved by the bank’s Montebello, California, office were fraudulent, Levin said, citing Washington Mutual e-mails.
Washington Mutual, based in Seattle, filed for bankruptcy on Sept. 26, 2008, the day after its banking unit was taken over by regulators and sold to JPMorgan Chase & Co. for $1.9 billion.
The case is U.S. v. Blanford, 08-00269, U.S. District Court, Eastern District of California (Sacramento).