Richard Shumway Imprisoned for Mortgage Fraud

The Office of the United States Attorney for the District of Vermont announced that Richard Shumway, 51, of Brewerton, New York, was sentenced today in United States District Court in Burlington to 51 months of imprisonment following his guilty plea to a federal wire fraud charge. Chief U.S. District Judge William K. Sessions III ordered that Shumway serve a three-year period of supervised release following completion of his prison term and pay restitution totaling $1,336,397.18. The court ordered that Shumway surrender to the Bureau of Prisons on May 5 to begin serving his sentence.

On January 3, 2008, a federal grand jury in Burlington returned a two-count indictment charging Shumway with mail fraud and bank fraud. Both charges stem from the activities of TSC Funding, a South Burlington-based mortgage brokerage business Shumway owned and operated in the 1990s until 2005. According to the indictment, Shumway skimmed a total of nearly one million dollars from more than 200 loans he brokered by means of payments taken outside of closing, without the knowledge of the borrower. As part of the scheme, Shumway arranged for Gerald Mullaney, formerly a licensed real estate appraiser in the Albany, New York area, to prepare falsified appraisals for the homes the borrowers were purchasing. This enabled Shumway to induce the borrower to take out a larger loan than necessary to buy the home, and also enabled Shumway to divert some of the proceeds of each loan to his own benefit. Shumway misled borrowers into believing the extra fees were to be paid to the lending institution to obtain a lower interest rate. Shumway was aided in this scheme by Nazzarra Bernardo of Syracuse, the owner of the title company that processed the closing paperwork on each loan and served as escrow agent.

Gerald Mullaney has already pled guilty to bank fraud and is awaiting sentencing.

Bernardo has pled guilty to conspiracy and is also awaiting sentencing.

This case was investigated by the Burlington, Vermont office of the Federal Bureau of Investigation.

Shumway is represented by Paul Volk. The prosecutor is Assistant U.S. Attorney Gregory Waples.