Owner of bankrupt mortgage business admits to fraud involving more than 800 customers and faces paying up to $32 million in restitution.
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Wesley A. Snyder pleaded guilty in U.S. District Court in Harrisburg Friday to a mail-fraud scheme that defrauded more than 800 mortgage customers, including about 300 in Lancaster County.
An evidentiary hearing was canceled Thursday because Snyder's lawyer worked out a plea agreement with the U.S. Attorney for the Middle District of Pennsylvania.
The agreement requires Snyder to make restitution to his victims, which the court stipulates to be somewhere between $15 million and $32 million.
The exact amount will be determined by the court when Snyder is sentenced. He faces a potential 30 years in prison and a $1 million fine, in addition to the restitution.
Authorities said that since 1988 Snyder took in more than $65 million from 811 purchasers of his "wraparound" mortgages but forwarded only $39 million to the banks and other institutions that provided the financing.
On Sept. 18, Snyder filed for bankruptcy on behalf of six Reading-based business entities he owned and operated, primarily under the names of Personal Financial Management Inc., OPFM Inc. and Image Masters.
Four days earlier, Snyder had notified more than 800 customers throughout central and eastern Pennsylvania and in other states that he could no longer make required mortgage payments on their behalf.
Snyder's wraparound mortgages were essentially second contracts tied to larger mortgages he brokered in their names with outside banks.
Customers agreed to refinance their mortgages for thousands of dollars more than they owed and then give the extra cash back to Snyder, who wrote "paper" mortgages at interest rates a point or more lower than standard rates.
According to court records, 30 customers who had paid off those mortgages with Image Masters found they still had mortgages on record with other lenders. One customer from Lehartsville who thought he had paid off his loan found he still owed more than $242,000.
Customers owed Image Masters about $67 million, but the company held mortgages in their name with outside banks for almost $102 million, according to court documents.
Snyder also defrauded 31 investors out of $3 million, the U.S. Attorney's Office said.
Snyder's business, which officials have called a Ponzi scheme, was under investigation by postal inspectors, the U.S. Attorney's Office and three other agencies.
The U.S. Attorney's office persuaded federal judge Yvette King on Oct. 16 to freeze Snyder's personal assets.
Manheim Township resident Michelle Weaver, a customer of Snyder's who now is a spokeswoman for the victims, said she had mixed feelings about the guilty plea.
"I feel good because I know the justice system is working," Weaver said. "But even though this terrible thing happened, I don't have hate in my heart."
There are three separate court actions related to the bankruptcies, including a motion filed Sept. 25 by a Berks County attorney to pursue a class-action lawsuit to void mortgages held by about two dozen of Snyder's lending partners.
An amendment to the complaint filed Friday in U.S. Federal Court in Philadelphia matches at least one plaintiff with each of the lenders it accuses of being in collusion with Snyder in the scheme.
Those companies include Washington Mutual, SunTrust, Countrywide, Citicorp, Chase, GMAC, HSBC, Sovereign, Wachovia and Wells Fargo.
Attorney Frank Farina, who co-filed the suit, said the some lenders added insult to injury when they began harassing Snyder's customers immediately after the mortgage broker filed for bankruptcy.
The suit claims that each lender engaged in conduct that caused harm to Snyder's victims. It asserts that the lenders "knew that they were sending all mortgagee statements, including 1098 federal tax forms" to Snyder's businesses and not to the plaintiffs.
"We allege very heavily that Snyder was functioning as their agent," Farina said.
"(Snyder) was their agent. He did all of the processing. If people paid (Snyder) and it didn't get passed on to the lenders, that is their problem. These people need to get credit for all of those payments."
E-mail: pburns@lnpnews.com