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CU System
U.S. Mortgage Corp. servicing manager pleads guilty
NEWARK, N.J. (5/17/10)--The former servicing manager of U.S. Mortgage Corp. pleaded guilty Thursday in a U.S. District Court in Newark, N.J., to conspiracy to commit wire fraud. Credit unions lost $136 million when the company and its subsidiary, CU National Mortgage LLC, fraudulently sold hundreds of their mortgage loans to Fannie Mae, then went bankrupt. Leroy Hayden, 47, of East Stroudsburg, Pa., was the servicing manager of Pine Brook, N.J.-based U.S. Mortgage from 2004 through Jan. 28, 2009. He admitted conspiring with company president Michael J. McGrath Jr. and several others to fraudulently sell the loans belonging to the credit unions, said the Department of Justice in a press release (PR Newswire May 13). Hayden provided to credit unions reports that falsely stated the loans that had been sold were still in the credit unions' portfolios, and, at McGrath's direction, concealed the sales. He also admitted he modified data in U.S. Mortgage's servicing system to help carry out the scheme, said the Department of Justice. The scheme used the proceeds from the sales to Fannie Mae to fund U.S. Mortgage's operations, McGrath's personal investments and investments he made on the company's behalf, said prosecutors. Hayden faces up to five years in prison, a maximum fine of $250,000, and possible restitution to the victims. His sentencing is scheduled for July 27. McGrath pleaded guilty in June 2009 to conspiracy to commit mail and wire fraud, and conspiracy to commit money laundering. He is scheduled to be sentenced on July 6.


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