Financier convicted of defrauding nearly 2,000 clients

A Philadelphia financier responsible for arranging funding for some of Center City's highest-profile developments was convicted Wednesday on federal fraud charges in a case victims hoped would spur regulators to more closely police financial crimes against small-business owners.

Jurors took less than three hours to determine that Matthew McManus, former co-owner of Remington Financial Group, helped bilk nearly 2,000 clients nationwide out of $26 million they had put forward hoping to land development loans for projects that included a Camden waterfront apartment complex and a California housing development.

Witnesses testified that McManus and co-owner Andrew Bogdanoff, who pleaded guilty to fraud charges in August, ran their company almost as two parallel businesses.

For well-connected clients, such as developer Bart Blatstein, McManus worked tirelessly to put together financing deals for projects such as the Edge at Avenue North, an apartment complex and shopping center on North Broad Street near Temple University.

Meanwhile, the company took money from smaller loan-seekers whom McManus and Bogdanoff had no intention of helping.

"Everyone who was working for this company knew it was a fraud," prosecutor David L. Axelrod said.

Remington's scheme worked victim by victim. Clients seeking funding found their way to Remington after a reference from a New York loan brokerage. Remington would agree to arrange financing for up-front fees of more than $10,000.

Once the money had been paid, the company intentionally found faults with proposed projects so it could blame those problems for its inability to find financing.

In 2007, the $6.5 million in revenue Remington earned from its fraud scheme far outweighed the $4.5 million it brought in through legitimate means, Axelrod said.

Testifying in his own defense, McManus said he took on all clients in good faith.

One of the victims was Ingrid Robinson, 65, of San Anselmo, Calif., who in 2007 paid Remington $10,000 in hope of securing funding for a condo and retail development.

After realizing she had been duped, Robinson went to the feds. On Wednesday, she said she hoped the case would prompt more than just lengthy prison terms for McManus and the nine other people convicted in the scam.

"I'm ecstatic," she said.

Frauds against small businesses fall into a gap in the purview of financial regulatory agencies. The Securities and Exchange Commission protects investors in mostly larger public companies.

The Pennsylvania Securities Commission handles small-scale stock and bond transactions. But, unlike some states, Pennsylvania does not treat loans the way it does securities.

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