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Tuesday
Jul222014

Former BofA employee jailed for taking bribes in short-sale scheme

A former Bank of America mortgage employee was sentenced to 30 months in prison for pocketing $1.2 million in bribes, given to him so he would approve the sale of distressed properties for far less than their actual value.

Kevin Lauricella, who had worked for BofA in Simi Valley, was sentenced Monday by U.S. District Judge Otis D. Wright II in Los Angeles, the U.S. Attorney's Office said.

He pleaded guilty in January to accepting bribes and falsifying bank records. 

Judge Wright ordered Lauricella to repay Bank of America $5.7 million in losses and forfeit a Thousand Oaks home he bought with the bribe money.

Lauricella worked for BofA in 2010 and early 2011 in a division that handled delinquent home loans. He negotiated short sale transactions, in which a lender allows property securing a mortgage or deed of trust to be sold for less than the existing loan balance.

By approving a short sale, the lender agrees to release the lien on the property securing the mortgage even though the lender will receive less than the full amount owed.

In 2010 and early 2011, lenders were still overwhelmed by the number of defaults on underwater mortgages, creating opportunities for insiders to exploit flaws in bank systems, the L.A. Times said, quoting Assistant U.S. Attorney Ranee A. Katzenstein.

Lauricella took bribes from buyers who intended to "flip" the properties, or quickly resell them. He then used his position to "approve" short sales that he was not authorized to approve, for sales prices far below the fair market value of the properties.

Lauricella then made false entries in BofA's computer system to make it appear that the bank had approved the short sales at the below-market prices.

He Lauricella admitted approving fraudulent short sales for at least nine properties.

A Bank of America spokesman told the L.A. Times that Lauricella was fired in 2011 and that the bank cooperated with the FBI investigation of the case.

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.