The topsy-turvy legal maneuvering surrounding an alleged $29 million Ponzi scheme affecting more than 800 customers of mortgage broker Wesley A. Snyder took another twist Friday.
Two lawsuits were filed Friday against Snyder and SunTrust Mortgage Co. by two Berks County couples — each of which signed one of about 175 open mortgages Snyder had brokered with SunTrust.
The suits bring individual and class-action complaints on behalf of all customers that contracted with Snyder's companies and SunTrust, provided the customers opt in with the class.
The complaint seeks repayment of funds paid to Snyder that were never applied to the homeowners' mortgages with SunTrust. It also seeks costs, interest, attorneys' fees and "additional relief."
For its part, SunTrust claims it never got the money Snyder's customers paid him and now is demanding it.
Plaintiffs Jamie and Donna Lorah of Reading and Jerry and Tamara Getz of Mohnton are among 811 of Snyder's customers — including about 300 from Lancaster Country — who owe a total of $40 million more on their mortgages because of the collapse in September of Snyder's "equity slide-down" mortgage program.
Snyder — whose companies included OPFM Inc., Personal Financial Management Inc. and Image Masters Inc., which operated at 1672 Manheim Pike — convinced the Lorahs in September 2005 to take out a mortgage in which they borrowed $33,000 more than what they owed in a second mortgage.
The Lorahs then returned the extra cash — the equity —!\qto Snyder, who wrote a paper mortgage at a "slide-down" interest rate — a point or more lower than the standard rate.
Like other equity slide-down customers, however, the Lorahs didn't learn that they had a larger mortgage with a higher interest rate with SunTrust (or one of more than 20 other lenders) until six of Snyder's businesses filed for bankruptcy Sept. 18. That's when the Lorahs discovered that they owed SunTrust the $33,000 they had paid to Snyder's company on top of the mortgage they had with OPFM.
Likewise, the Getzes learned that many "substantial" extra payments and prepayments they made to Image Masters on their $227,300 mortgage between January 2005 and September 2007 were never turned over to SunTrust.
In the two 30-plus page suits filed before Berks County Court Judge Albert A. Stallone, SunTrust is labeled a co-conspirator with Snyder, who is facing up to 30 years in prison and $1 million fines when he is sentenced March 11 for his role in what prosecutors called a 19-year Ponzi scheme.
The suits claim SunTrust did not honor its contractual duty of "good faith and fair dealing" with the plaintiffs concerning loan disclosures.
"Without the involvement and complicity of SunTrust as a funding lender, the mortgage Ponzi scheme could not have operated," the suits state.
The complaint specifically targets loan-servicing transfer agreements that allowed customer's bills and personal information to be sent from SunTrust to Snyder's offices, which kept customers in the dark about what they really owed to SunTrust. Snyder sent customers OPFM mortgage statements from Image Masters.
"Without the slacking off of SunTrust in failing to supervise the Snyder Entities, the mortgage servicing would have failed in its infancy. … Instead SunTrust provided the life's blood to the illegal scheme by continuing to fund the bogus equity slide down mortgages … ."
The suit claims that SunTrust correspondence that actually went to Snyder's customers from at least the late 1990s through 2007 advised "if you have any questions regarding the enclosed information, pleases contact Personal Financial Mgt. (OPFM)."
The suit charges that the letters are "deceptive and contributed to the intentional confusion and intended misunderstanding of the plaintiffs … ."
Although SunTrust did not benefit directly through Snyder's scheme — because Snyder kept the extra money that allowed the slide-down rate — the suits claim that SunTrust was unjustly enriched because the plaintiffs' money was used "to pay for more advertising, marketing, promotion and origination of Snyder-SunTrust loans."
E-mail: pburns@lnpnews.com