A New Kent County businesswoman is facing up to 30 years in prison today for her role in a $1 million mortgage loan scam that caused $568,293 in losses to eight lenders.
Nicole G. Hathaway, 34, formerly president of Mortgage Solutions II, pleaded guilty last September to mail fraud and is scheduled to be sentenced this morning by U.S. District Judge James R. Spencer.
Federal sentencing guidelines call for a term of 33 to 41 months, though Spencer is free to sentence below or above the recommendation.
In court papers filed last week, her attorney, Angela Whitley, asked that Hathaway not serve any prison time, but rather a term of probation or home confinement.
Hathaway's parents and siblings are dead and she provides care for five children, three of them her own. "Ms. Hathaway has no immediate family members capable of caring for her children should she receive a sentence of incarceration," Whitley wrote.
"In addition to being an exemplary parent and caregiver, Ms. Hathaway owns her own business. Unfortunately, should the Court sentence her to imprisonment, the business would have to close and thirty people would lose their jobs," wrote Whitley.
Whitley also argued that Hathaway had a limited role in the scheme and challenged the extent of the losses alleged.
A sentencing memorandum filed by David T. Maguire, an assistant U.S. attorney, however, argued for a prison term within the guideline recommendation. No incarceration, he wrote, "would promote disrespect for the law."
Maguire wrote that the $568,203 loss was calculated by subtracting the amount the lending institution received in foreclosure sales from the unpaid balance on the defaulted loan at the time of the foreclosure.
Usually the borrowers could not even make their first payment, Maguire wrote. As far as her family goes, Maguire argued, "Even the worst criminal will have good and decent family members who suffer from the defendant's incarceration."
In pleading guilty, Hathaway admitted that from 2007 through 2008, she assisted in fraudulently obtaining or attempting to obtain nine mortgage-backed loans (one lender refused to make the loan).
According to the prosecution, the participants enticed financial institutions to make loans to unqualified buyers, recruited "straw borrowers," and made false statements on loan documents and settlement statements.
The sellers inflated the price of property to pay off existing loans and make a profit; loan originators and real estate agents received commissions; and buyers got to live in a house they were not qualified to buy.
As the loan originator, Hathaway was involved in the settlement phase of the scheme, creating false documents to corroborate that the buyers had paid the down payments and closing costs.
Hathaway would make it appear that a buyer had been given a gift of a down payment from a relative to help purchase a property or just front the down payment herself and the seller or realtor would pay her back later with proceeds.
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