A $30 million short sale scheme, a guilty plea, and a regulator that said never again
A federal judge backed the housing regulator’s decision to permanently shut a convicted mortgage fraudster out of the industry.
A New Jersey man pleaded guilty in December 2022 to conspiracy to commit bank fraud and bank fraud in a federal court. The charges arose from a multi-year, $30 million scheme built on fraudulent “short sale flips” - misleading lenders into accepting losses on their mortgages, then reselling the properties to new buyers at higher prices.
In September 2023, he was sentenced to two years in prison and ordered to pay hundreds of thousands of dollars in restitution. He tried to withdraw his guilty plea. A district court said no. The Third Circuit affirmed in late 2024.
Then the Federal Housing Finance Agency stepped in.
In November 2025, FHFA notified the man that it had issued a proposed suspension order under the agency’s Suspended Counterparty Program - a regulatory tool created after the 2008 housing crisis that allows the agency to bar individuals from doing business with Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. The program targets people whose conduct would be “likely to cause significant financial or reputational harm to a regulated entity or otherwise threaten the safe and sound operation of a regulated entity.”
On January 15, 2026, FHFA made it final. Every regulated entity was directed to stop doing business with him - indefinitely - effective March 4, 2026.
He sued the following month, representing himself, arguing the suspension was arbitrary under the Administrative Procedure Act. He filed for a preliminary injunction on July 2, 2026.
On October 19, 2026, Judge Carl J. Nichols of the US District Court for the District of Columbia denied the motion.
The court found FHFA acted reasonably. The plaintiff’s bank fraud convictions plainly qualified as “covered misconduct” under program regulations, which cover any conviction involving fraud “in connection with a mortgage, mortgage business, mortgage securities or other lending product.” The rules give the agency discretion to impose suspensions “for a specified period of time or permanently,” and he pointed to no legal authority requiring a lesser sanction.
The plaintiff himself conceded FHFA “plainly” “possessed authority to suspend” him. His argument was narrower - that an indefinite ban was disproportionate. The court was unconvinced. On irreparable harm, it noted any reputational damage “is primarily attributable to his own prior criminal conduct.”
For mortgage professionals and compliance teams, the decision is a practical signal: FHFA’s Suspended Counterparty Program carries real teeth, and courts appear willing to defer to the agency on severity. An indefinite ban from Fannie, Freddie, and the Home Loan Banks is, for practical purposes, an industry exit order.
