McGrath sentencing delayed to March 22

NEWARK, N.J. (1/11/10)--The sentencing of the former CEO of the defunct U.S. Mortgage Corp. and CU National Mortgage for fraud has been postponed again by the U.S. District Court for the District of New Jersey--this time until March 22.

Michael J. McGrath Jr., pleaded guilty in June to one count of mail and wire fraud and one count of money laundering conspiracy in defrauding $139.6 million from 19 credit unions, Fannie Mae and others (News Now June 12).

Originally McGrath was to be sentenced on Oct. 1, but that date was postponed to Nov. 30 and then to Feb. 1, according to the court docket.

Under a plea bargain, McGrath is expected to be sentenced to between 12 1/2 and 20 years in prison and to pay restitution to the victims.

He admitted to conspiring with others from January 2004 to January 2009 to fraudulently sell credit union loans and use the proceeds to finance U.S. Mortgage's operations plus investments for himself and his company.

He also admitted to diverting funds that should have been paid to credit unions for mortgage loans sold without authorization to Fannie Mae to help offset bad investments in mortgage-backed securities, according to prosecutors (Reuters June 11).

The mortgage companies, based in Pine Brook, N.J. filed for Chapter 11 bankruptcy in February in Newark.

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