Reported in an article in The Morning Call
, Pennsylvania builder and mortgage company owner Gene Percudani was sued five years ago by the Pennsylvania Attorney General
for claims that hundreds of homeowners had been duped into buying homes at inflated prices. Then-Pennsylvania Attorney General Mike Fisher was seeking $10 million in fines and restitution against Percudani, claiming it was one of the biggest fraud cases he'd ever seen. Last Friday, Fisher's successor, AG Tom Corbett, settled the suit against Percudani, who agreed to pay $250,000 and accepted permanent banishment from participating in the mortgage business in Pennsylvania. None of the money will go toward restitution to the homeowners, and Percudani, who is free to build homes again, admits no wrongdoing, said Kevin Harley, a spokesman for Corbett. Essentially, the settlement only covers the cost of the (failed ?) civil prosecution.
The dream of home ownership turned into a nightmare for many aspiring homeowners, who bought homes at inflated prices and, unable to sell or refinance their mortgages, ended up in foreclosure and bankruptcy. In 2001, allegations that Percudani engaged in corrupt practices drew the attention of Freddie Mac
and Fannie Mae
, the nation's quasi-governmental suppliers of mortgage funding. Their subsequent investigations revealed that the homes were overpriced by as much as $80,000, and resulted in Percudani being placed on their exclusionary list, which virtually barred him from the lending business.
Reportedly, Freddie Mac
also forced Chase Manhattan Mortgage Corp., which financed Percudani's loans, to ''write down'' more than 200 mortgages at a cost of $8 million. Percudani, who escaped criminal prosecution when a statewide investigative grand jury declined to indict him in 2005, remains the subject of a federal lawsuit alleging he conspired with Chase Manhattan Mortgage to defraud nearly 100 home buyers. That suit, which is scheduled to go to trial in Scranton early next year, is the only hope for restitution, according to Harley, spokesperson for the Pennsylvania AG's office.
For more, see State ends part of Poconos fraud case (Home builder agrees to pay $250,000 and a ban from mortgage work)