Last Friday, a former Wells Fargo branch manager, sales manager and loan officer, Robert Serao, pled guilty to conspiracy to commit wire fraud. The charge stems from Serao’s involvement in a $40.8 million mortgage fraud scheme during his time at Wells Fargo. Allegedly working in concert with at least nine others, Serao used “straw buyers” to obtain underwriting approvals of what in actuality were fraudulent loan applications.
In the pre-2008 mortgage boom, if a potential homebuyer lacked sufficient credit to obtain the necessary loan, unscrupulous loan officers and real estate brokers enlisted (or sometimes created) an individual with good credit (i.e., a “straw buyer”) to pose as the loan applicant, in the stead of the actual buyer. In exchange for allowing his name and credit profile to be used in connection with the loan application, the straw buyer received a kick-back from the loan proceeds. Meanwhile, officers such as Serao, who approved the loans, benefitted from increased commissions from loans to borrowers that, but for the scam, would not have qualified for the loan for which he or she was applying.
Serao faces a maximum potential penalty of 30 years in prison and a $1 million fine for his involvement in the conspiracy.