The owner of two San Diego-based mortgage investment firms was sentenced Friday to 18 months in prison for his admitted role in orchestrating a widespread commercial bribery and tax-evasion scheme.
Israel Hechter, operator of Ocean 18 LLC and Note Tracker Corp., also will have to serve three years of supervised release and pay restitution of $396,530 to victim GMAC Mortgage.
Hechter disbursed nearly $1 million in bribes to bank insiders at that company and at J.P. Morgan Chase Bank and National City Bank, according to prosecutors.
In exchange, the bankers arranged for Hechter to win bids to buy mortgage loans on the secondary market. In tipping the scales in Hechter’s favor, they altered, rejected, ignored and even erased bids from qualified competitors, court documents state. The bankers also supplied Hechter with confidential information about prices and competing bids.
In his guilty plea, Hechter, 47, admitted paying GMAC banker Robert Moreno hundreds of thousands of dollars, including $330,000 in cash. Hechter arranged to have his father, Zeev Hechter, hand-deliver the cash to Moreno. In so doing, Hechter assisted the banker in hiding the illegal payments from the Internal Revenue Service.
In 2013, Hechter paid another $336,000 through a sham “consulting” agreement that he entered into with Moreno. These bribes were disguised as legitimate fees paid for services unrelated to Moreno’s work at GMAC.
Moreno pleaded guilty last October, conceding that he took in a total of more than $1 million in bribes from Hechter and another GMAC customer.
Hechter also paid hundreds of thousands of dollars in bribes to Lynda Sanabria, another banker who sold mortgages on the secondary market on behalf of JP Morgan Chase Bank. Sanabria has also pleaded guilty, admitting to receiving bribe payments from Hechter in return for her influence over Chase’s mortgage sales.
Hechter’s brother and business partner, Amir Hechter, and his employee Jack Prober also participated in the bribery scheme by writing personal checks to the bankers, to help the bankers evade paying taxes on the illegal income.
Zeev Hechter, Amir Hechter and Prober each admitted their participation in the bribery and pleaded guilty in September 2014.
After purchasing the mortgages, Hechter combined the loans and sold shares of the pools to investors, usually friends and family members, including Zeev Hechter, Amir Hechter and Prober.
Ocean 18 LLC would service the mortgage loans by collecting monthly payments from the borrowers or initiating foreclosure proceedings when the borrowers defaulted. The investors made money when borrowers made payments or sold the properties, or after foreclosure and resale.
The mortgages at issue were bought on the secondary market after the banks had issued funds to homeowner borrowers. Secondary purchasers of mortgages provide primary lenders with additional capital and reduced credit risk, and in turn provide borrowers with greater access to mortgage loans.
Ben Keisari, 31, who operated the business BGK Investments out of Woodland Hills, pleaded guilty in March to paying bribes to Moreno. He admitted that he gave Moreno more than $350,000 in return for the latter’s help ensuring that his company won its bids to purchase GMAC mortgage notes.
Hechter was the fourth defendant sentenced in the case. In March, Zeev Hechter was ordered to serve six months in custody and to pay a $50,000 fine and restitution of $165,000.
In May, Amir Hechter was sentenced to 18 months in prison for his role in the scheme and was ordered to pay a $25,000 fine along with restitution of $63,474.
In June, Sanabria received a term of six months in prison followed by the same period of home confinement, and was ordered to pay $40,420 in restitution to the IRS.
Moreno is scheduled to be sentenced Sept. 8, followed by Keisari and Prober, both on Oct. 5.
— City News Service