Arizona loaners plead guilty in $27 million scheme

National Mortgage Professional

Two former officers of Arizona-based residential mortgage loan originator American Mortgage Specialists Inc. (AMS) have pled pleaded guilty to their roles in a $27 million scheme to defraud North Dakota-based BNC National Bank, announced Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP); Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Timothy Q. Purdon of the District of North Dakota; and Steve A. Linick, Inspector General of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG). Powers and McMaster face a maximum penalty of 30 years in prison.

Scott N. Powers, CEO of AMS and David E. McMaster, an AMS vice president, pleaded guilty before U.S. District Judge Daniel L. Hovland in the District of North Dakota to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Lauretta Horton, the former director of accounting at AMS, and David Kaufman, an outside auditor, were also charged in separate informations for their roles in the scheme.

“Powers, McMaster, and their alleged co-conspirator took advantage of BNC National Bank receiving $20 million in TARP funds to defraud BNC out of more than $27 million in a scheme engineered to cover their losses from the downturn in the housing market,” said Special Inspector General Romero. “They used BNC as their personal piggy bank, and the bank was unable to pay millions of dollars in TARP dividend payments owed to American taxpayers. Fraud against TARP banks equals fraud against taxpayers, and SIGTARP and our law enforcement partners will hold perpetrators of TARP fraud accountable for their crimes.”


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