The Real Deal New York

Ken Harney Rent-a-bank account

November 27, 2007
By Ken Harney

Call it funny money for the housing boom: Now you don’t need actual cash in the bank to buy a house. All you need is somebody who says you’ve got money in the bank.

Sound bizarre? Welcome to the wonder world of “asset rentals” now being investigated by bank and mortgage industry fraud experts.

It works like this: Say your loan officer discovers that you lack the financial wherewithal needed to qualify for the mortgage you want. Rather than lose your business, however, the loan officer turns to a service that offers “asset rentals.” For a flat fee of 5 percent of the amount you need, the service will verify to anyone who asks that the $100,000, $500,000 or $1 million in bank deposits you’ve claimed on your loan application documents are yours indeed.

In fact, the deposits are not yours, but nobody will be able to detect this because you’ll have a bank account with your name on it, at least temporarily. If you need to “rent” the account for longer than a month, it will cost you three-quarters of 1 percent of the asset amount, payable in advance each succeeding month.

Here’s how one mortgage fraud investigator, posing as a mortgage broker, was pitched the asset rental concept in mid-August.

“Dear ___, It was nice speaking with you today. Hopefully this email will provide solutions to you like so many other mortgage brokers and financial advisors over the years. The Asset Rental program is a terrific tool which enables you to ‘save’ clients you would otherwise lose due to their inability to show sufficient assets.” The same e-mail pitched still another “helpful” tool verifications of employment.

Say a borrower can’t show proof of employment or document an income source.

That’s where the asset rental service’s “VOE” (verification of employment) program comes in. Essentially, you indicate on a faxed form what annual or monthly income you or a home-buyer client needs to qualify for a mortgage, and the asset rental company will verify to anyone who asks that you have been paid those amounts.

The cost: just 1 percent of the claimed annual income. “For example,” says the pitch, “$100,000 of annual income cost of $1,000. Minimum is $50,000.” The email came with attachments that directed payments for asset rentals and employment verifications to an account number at Wachovia Bank in Roanoke, Va.

This and other e-mail pitches carried the sender name of Loren Gastwirth, identified on the e-mail as vice president-marketing for Morgan Sheridan Inc. of Mesquite, Nev. The asset rental attachment carried the name Independent Global Financial Services Ltd., with an address in Las Vegas.

The verification of employment form carried instructions to fax the desired “VOE” information to a Zexxis Co., with the same Mesquite, Nev., address on Loren Gastwirth’s Morgan Sheridan card. When I called the number listed for Gastwirth, I received no reply, but instead heard back from a person identifying himself as Allen Paule.

Paule is listed in corporate filings with the Nevada secretary of state as the “registered agent” for Morgan Sheridan, Independent Global Financial Services, and Zexxis Corp. Paule said the asset rental and employment pitches including downloadable attachments and forms carried on Morgan Sheridan’s Web site were not connected to his firms. He said, “somebody hijacked our Web site.” He confirmed that a Loren Gastwirth works for Morgan Sheridan. And he also confirmed that Independent Global Financial Services, Morgan Sheridan and Zexxis Corp. have overlapping ownership and management.

According to Nevada corporate records, a Paul Gastwirth is listed as president and director of Morgan Sheridan. The Web site of Vault Financial Services Inc. of Las Vegas lists Paul Gastwirth as CEO of that firm, and president of Independent Global Financial Services, “a company specializing in asset rentals and enhanced credit facilities for individuals and companies worldwide.”

Paule had no explanation for how the e-mail pitches carrying the three firms’ identities were distributed widely within the mortgage brokerage field. He also said “the police won’t help because they say nobody has been injured.”

A spokesman for the Las Vegas field office of the FBI, David Schrom, confirmed that his office had “received information” from FBI headquarters on Morgan Sheridan and Independent Global Financial Services, but would neither confirm nor deny that the FBI is investigating the firms.

A spokeswoman for Wachovia Bank, Christy Phillips, would only say that “we are investigating the situation.”
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Ken Harney is a real estate columnist for the Washington Post.

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