Florida Man Pleads Guilty to Fraud Scheme Against M&T Bank

BUFFALO, NY—The United States Attorney’s Office for the Western District of New York announced today that Frank Garcia, 51, of Florida, pleaded guilty before U.S. District Court Judge Richard J. Arcara to fraud affecting a financial institution. The charge carries a maximum penalty of 30 years in prison, a fine of $1,000,000, or both.

Assistant U.S. Attorney Trini E. Ross, who is handling the case, stated that the defendant is the former owner of Federal Guaranty Mortgage Company in the state of Florida. Garcia recruited “straw buyers” to obtain mortgages from M&T Bank and other financial institutions then misrepresented their assets and liabilities, failed to record the liens on the properties in the county clerk’s office, and failed to pay off pre-existing liens on the properties when they were transferred from one owner to another.

Furthermore, the defendant directed employees of Federal Guaranty Mortgage Company to prepare loan packages for borrowers. The employees were then directed to sign the documents acting as the loan officer. The loan documents were then sent to the investor financial institutions, including M&T Bank. The loan proceeds for the fraudulent loans were subsequently wired into the account of a company associated with Federal Guaranty Mortgage Company. As a result of the defendant’s actions, M&T Bank suffered a loss of $4,407,515.48 and the total loss to all financial institutions affected by the fraudulent scheme was approximately $24,000,000.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The plea is the culmination of an investigation on the part of special agents of the Agency Federal Bureau of Investigation, under the direction of Acting Special Agent in Charge Richard M. Frankel.

Sentencing is scheduled for August 15, 2013, at 1:00 p.m. before Judge Arcara.