Edward Sypher Jr., former CFO of mortgage lender Vanguard Funding, was sentenced to 18 months’ imprisonment to be followed by three years’ supervised release. Sypher pleaded guilty in February to conspiring to commit wire and bank fraud in connection with the diversion of warehouse loans Long Island-based Vanguard had obtained to fund home mortgages and to refinancing mortgages.
Sypher was also ordered to pay $22,150.45 in forfeiture. Sandra Feuerstein, U.S. District Judge, imposed the sentence, and the court will set the amount of restitution in the future.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Maria T. Vullo, Superintendent, New York State Department of Financial Services (DFS), announced the sentence.
“Edward Sypher Jr. has been punished for deceiving his banking partners in order to divert millions of dollars to his own benefit and that of other Vanguard executives,” said United States Attorney Richard Donoghue. “This office, working hand-in-hand with our law enforcement partners, will continue to vigorously investigate and prosecute business executives who choose to commit fraud as a means of getting ahead at the expense of the businesses and residents of our district.”
Vanguard was a 33-branch, mortgage lending institution licensed in California, Connecticut, Florida, Georgia, Maryland, Massachusetts, North Carolina, New Jersey, New York, Pennsylvania and Washington. Between August 2015 and March 2017, Sypher and his co-conspirators at Vanguard engaged in a multi-million-dollar fraud scheme by falsely representing that the loan proceeds would fund or refinance mortgages for clients. Instead, Sypher and his co-conspirators diverted the funds to pay personal expenses and compensation, and to pay off loans they had previously obtained through fraudulent loan applications.
“When fraudsters treat investors like their own personal ATMs, using funds invested in good faith to line their own pockets, pay for personal expenses, and repay other fraudulent loans, confidence in the integrity of our financial systems suffers,” said William Sweeney, assistant-director-in-charge for the FBI.
On December 10, 2018, Matthew Voss, Vanguard’s former chief operating officer, was sentenced to 24 months’ imprisonment for his role in the scheme.