Center City broker gets 16 years in loan fraud

A Philadelphia loan broker responsible for lining up funding for some of Center City's most high-profile recent developments was sentenced Tuesday to 16 years in prison for his role in a $26 million fraud that bilked nearly 2,000 hopeful entrepreneurs out of money they gave him to secure small-business financing.

As part of an agreement with prosecutors, Matthew McManus, a former co-owner of Remington Financial Group, agreed to pay back $17.7 million to his victims.

He said Tuesday that he was "truly and painstakingly sorry" for his crimes - an admission that left U.S. District Judge William H. Yohn Jr. puzzled.

On the one hand, the judge said, McManus, 46, had proved he was capable of making significant money through legitimate business, including the $60 million he landed in 2004 for developer Bart Blatstein to fund the Edge at Avenue North, an apartment complex and shopping center near Temple University.

At the same time, however, McManus was stealing from less-connected clients seeking money for smaller-scale projects, which ranged from a proposed Camden waterfront apartment complex to a California housing development planned by a former San Diego mayor.

"That is the real contradiction in this case," Yohn said.

McManus responded: "I used to think of myself as someone who could contribute good things in the world. Now I understand the pain I have caused the victims."

McManus is the sixth defendant to be sentenced in a case that victims hoped would spur federal regulators to more closely police financial crimes perpetrated against small-business owners.

Remington co-owner Andrew Bogdanoff was sentenced in March to more than 18 years.

And Yohn indicated Tuesday that if McManus hadn't struck a last-minute deal with prosecutors involving restitution, he likely would have received a much stiffer sentence. Under federal sentencing guidelines, McManus' crimes could have warranted 30 years to life behind bars.

"The environment is just ripe for this type of fraud," Assistant U.S. Attorney David L. Axelrod said. "Banks have really limited the types of loans they're making and increased their criteria for loans. It has made a lot of entrepreneurs and first-time businesses really desperate and willing to turn to less-than-reputable businesses."

According to prosecutors, Remington's scheme worked similarly for each victim who came to the business between 2005 and 2011.

Clients seeking funding found their way to McManus and Bogdanoff after a reference from a New York loan brokerage firm.

Remington agreed to help each of them land financing in exchange for up-front fees in excess of $10,000.

But the company never had any intention of helping. Once the money had been paid, its staff worked to find fault with the proposed projects so that Remington could later blame those problems for its inability to line up financing.

And while some of the company's clients were left bankrupt or even homeless, McManus raked in millions, which he used to buy a private plane, a $130,000 Porsche, million-dollar homes in Glenside and Nantucket, Mass., and a Locust Street pied-à-terre for his wife.

For Ingrid Robinson, the gulf between McManus' wealth and that of victims like her stung the most.

Robinson fell victim to the Remington fraud in 2007, after paying the company $10,000 in hopes of finding funding for a condo and retail development she hoped to build outside of San Francisco.

When she realized she had been duped, she doggedly pursued the firm, putting other victims in contact with each other and helping to drive the prosecution of the case.

As she left the courtroom Tuesday, Robinson said: "He got exactly what he deserved."

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