TORONTO (Reuters) - A man pleaded guilty on Thursday in Manhattan federal court for his role in leading a subprime mortgage fraud of more than $10 million that ended in a slew of defaults and foreclosures, U.S. prosecutors said.
Sharmon Howell, 36, admitted to one count of conspiring to commit bank and wire fraud after he and three co-conspirators obtained more than two dozen subprime mortgages on terms the lender would not have approved had they known of the scheme.
Howell, sometimes known as Sharmon Wade, entered his plea before U.S. District Judge George Daniels in Manhattan. He is expected under his plea agreement to face 10 to 12-1/2 years in prison and a possible $1 million fine when he is sentenced on September 21. A maximum 30-year prison term is possible.
“He is extremely remorseful,” Howell’s lawyer B. Alan Seidler said in an interview. “He wants to put this behind him, and make restitution to the victims as quickly as possible.”
Prosecutors said Howell and his cohorts in 2006 and 2007 recruited “straw buyers,” including from a halfway house, to buy properties in and near New York City.
Howell would then obtain fraudulent appraisals, misrepresent to lenders the ability of the buyers to keep up with payments, and sometimes tell buyers he would cover their mortgage payments for several months.
After obtaining mortgages in excess of the homes’ sale prices, Howell and his cohorts would then pocket the “spread,” and thereafter often allow the mortgages to go in default.
The “vast majority” of the loans obtained are now in default or foreclosure, prosecutors said.
Two other defendants, David Moore and June Persaud, have also pleaded guilty over the scheme and await sentencing. A fourth defendant, Oscar Ancrum, is at large.
The case is U.S. v. Howell, U.S. District Court, Southern District of New York, No. 09-cr-00145.
Reporting by Jonathan Stempel; Editing by Tim Dobbyn