Pennsylvania Lender to Pay $3.9 Million Fine

A Pennsylvania mortgage lender has agreed to pay a fine of $3.9 million to settle a lawsuit for lying to federal mortgage officials. The fine suit was filed in the Central District of California, alleging that officials of Capmark Finance LLC of Horsham, Pennsylvania made a series of false statements in connection with two nursing home mortgages that were insured by the U.S. Department of Housing and Urban Development.

Federal prosecutors said that Capmark officials misrepresented material facts critical to the borrower’s credit standing in the two loan applications, which induced HUD to insure the loans on faulty information.

The two nursing homes were Canoga Care Center in Canoga Park, California and Hudson Valley Care Center, which is located in Ghent, New York. The two facilities have been through a series of legal wranglings involving foreclosure since the lawsuits were filed.

Federal authorities say the prosecution of company officials may still result in felony criminal convictions on related counts. But federal officials declined to say who against or when any charges may be filed. The lender filed for bankruptcy protection shortly after federal authorities filed charges in the case in 2009.

Canoga Care Center

“Attesting to things you know to be false is not only lying, it is against the law and there will be consequences,” said Helen Kanovsky, HUD’s general counsel. The case was part of the federal government’s interagency Financial Fraud Enforcement Task Force started by the Obama administration to prosecute those who helped trigger the U.S. financial crisis.

The task force includes a broad range of federal agencies, including inspectors general, and state and local law enforcement agencies.

The group is working together to improve efforts across federal agencies and with state and local partners to investigate and prosecute financial crimes, which produced the U.S. financial crisis that started with the collapse of the nation’s housing markets.