An ill-gotten life of luxury will come to an end for one California man, who was sentenced to more than four years in federal prison for operating a multi-million-dollar mortgage fraud scheme that bilked the federal bank bailout program.
The scheme run by Steven Pitchersky, 65, of Rancho Mirage, Calif., cost GMAC -- now known as Ally Financial -- $5.3 million, according to a report released Wednesday by the special inspector general for the federal bank bailout program.
“Pitchersky drew down millions of dollars on a warehouse line of credit with Ally through lies and false pretenses, faking that he used Ally’s funds to pay off refinanced mortgages while, instead, he used the money in part to fund his luxurious lifestyle and extravagant art collection,” wrote Special Inspector General Christy Romero.
From 2009 to 2011, Pitchersky falsely represented Nationwide Mortgage Concepts — a mortgage lender he operated — to Ally by claiming NMC already held a $10 million warehouse line of credit with a company called “MPL.”
MPL, however, was a corporate fake created by Pitchersky using a fake name and his personal cell phone number.
Pitchersky then used another firm, a title company dubbed Hanover, to obtain money through a loan from Ally.
Unbeknownst to Ally, Pitchersky had created Hanover with another man, giving him control of the loan money.
Believing NMC was legitimate, Ally gave it more than $5 million to pay off what it thought was the mortgages of 23 clients.
Instead, Pitchersky used the money to pay off other customers’ mortgages between December 2010 and January 2011.
Ally bank received $17.2 billion in 2009 from the bailout, formally known as the Troubled Asset Relief Program, or TARP.
“Defrauding a TARP recipient is the same as defrauding American taxpayers who funded the TARP bailout,” Romero said.
Pitchersky pleaded guilty last September to wire fraud in connection with the scheme. In addition to the 51-month prison sentence he was given earlier this month, he must pay nearly $3.2 million in restitution and undergo five years of supervised release.