Federal prosecutors in Philadelphia today indicted loan broker Matthew McManus, of Glenside, and his business partner Andrew Bogdanoff, of Arizona, and charged them with fraud, conspiracy and money laundering for having "defrauded more than 800 victims out of more than $10,000,000" (amount corrected) according to a statement from US Attorney Zane David Memeger, FBI special agent-in-charge George Venizelos, and IRS Acting Special Agent-in-Charge Akeia Conner. Four of their out-of-state brokers were also charged with fraud. Bogdanoff also faces federal tax fraud charges. More on the indictment here.
Bogdanoff was founder and chairman of Philadelphia-based Remington Capital Group and related companies, and McManus was his partner in the business until he left in 2008. Bogdanoff's lawyer did not immediately return phone calls.
Updated: Says McManus' lawyer, Lisa Mathewson: "The charges appear to relate to Mr. McManus's relationship with a former business associate in Arizona. They do not reflect on Mr. McManus's own Philadelphia-based business, nor on his excellent reputation for closing successful business deals with integrity. He intends to fight them."
McManus has in recent years said he raised money through another firm he controlled, NAI Bluestone Real Estate Capital, for well-known Philadelphia projects, including Bart Blatstein's recent Erbe Apartments complex and other Blatstein projects, from lenders including Greystone Capital, Beneficial Bank, and Firstrust Bank, among others.
McManus operated NAI Bluestone from an office at 1033 North Second Street, which is also the headquarters location of Blatstein's firm, Tower Investments. Blatstein, who developed the Piazza, Apollo at Temple, and other Philadelphia sites, and who owns the Inquirer building, which he hopes to convert to a gambling casino, last night declined to comment on McManus' indictment.
McManus is a well-known figure in local property investment and social circles. McManus gave $14,000 to state treasurer Rob McCord in a 2008 election campaign, $12,500 to former Gov. Ed Rendell in 2006, and smaller sums to their fellow Democrats, ex-state Sen. Vincent Fumo and state Rep. Vincent Hughes; and $4,500 to Philadelphia Mayor Nutter's 2007 election campaign, public reports show.
If convicted of all charges, Bogdanoff faces up to 282 years in prison; McManus faces up to 105 years in prison. Also charged with fraud were brokers Shayne Fowler, 27, of Scottsdale, Arizona; Joel Nathanson, 25, of San Diego, California; Frank Vogel, 47, of Rochester Hills, Michigan; and Aaron Bogdanoff, 24, of Scottsdale, Arizona. The Bogdanoffs also face federal tax fraud charges.
According to the indictment, starting in 2005, Bogdanoff, McManus, and brokers working in other states "fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece, based on false representations that Remington had lenders and/or investors ready to provide financing for the victims’ projects." In a statement, the FBI's Veinzelos says the group preyed on "desperate" business owners who needed capital to keep their projects alive.
Examples of unnamed victims described in the indictment include a New Jersey developer trying to raise $27 milllion for a Camden project, a Pennsylvania developer trying to raise $22 million for a solar electric power farm, and others in California, Florida, Mississippi, and Washington State, among other places.
Remington and its brokers would write "letters of interest" to make it appear they had located financing for developer's projects, charge thousands of dollars in fees, then fail to deliver financing.
According to the indictment, in many cases Remington never had funding lined up but "fraudulently" took fees anyway and "misrepresented" the terms the developers were likely to get.
The government also says Remington gamed potential clients' attempts to search for information about them online by posting "false" information about its own anti-fraud activities on the Web to make it harder for browsers to find online postings claiming they were failing to deliver promised funding.
Also according to the indictment, Remington pretended to be the "acutal lender" in these projects; Remington exaggerated its success rate at finding financing; and Remington promised to provide funding through an internal funding source, Northridge Capital, when in fact the funds weren't available.
The government also accuses McManus of obstruction of justice for allegedly lying to investigators after he left Remington and after the FBI and IRS executed search warrants around the company's Arizona office.
"We just learned about it today. We can't comment on it," said Spencer Yablon, who heads the Philadelphia-area office of Marcus & Millichap, where McManus has worked in recent months as a mortgage originator after bringing his team from NAI Bluestone to work for the brokerage last fall.
Assistant United States Attorney David Axelrod will prosecute the case.