Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Blast from the past

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA

v.

BERNADETTE NICHOLAS

KEVIN D. McALLISTER

WAYNE ROSEN

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DATE:

CRIMINAL NO.: 10-

VIOLATIONS:

18 U.S.C. § 1344 (bank fraud - 2 counts)

18 U.S.C. § 1014 (loan application fraud

- 55 counts)

18 U.S.C. § 215 (bank bribery - 2

counts)

26 U.S.C. § 7206(1) (filing false and

fraudulent income tax return - 2 counts)

26 U.S.C. § 7201 (tax evasion - 3 counts)

18 U.S.C. § 2 (aiding and abetting)

Notice of forfeiture

INDICTMENT

COUNT ONE

(BANK FRAUD)

THE GRAND JURY CHARGES THAT:

At all times material to this indictment:

1. Defendant BERNADETTE NICHOLAS was an independent mortgage

broker, who maintained an office at her home on Camelot Lane, in Newtown Square,

Pennsylvania.

2. Defendant BERNADETTE NICHOLAS’s duties and responsibilities as

a mortgage broker included, among other things: (a) assisting borrowers who were seeking

financing to purchase properties or personal loans in completing mortgage loan application

forms; (b) gathering information about a borrower’s income, employment history, assets, and

financial obligations; and (c) locating a mortgage lending company that would be willing to

provide financing for the borrower. She handled borrowers’ loan applications from the time of

their preparation, the submission of the loan applications to financial institutions for approval,

and also attended the real estate closings where her clients’ loans were funded by financial

institutions.

3. Defendant BERNADETTE NICHOLAS represented borrowers who

were unable to obtain financing from banks and other finance companies at the lowest market

rates, leaving them with few options in the mortgage lending market, because the borrowers did

not meet most financial institution’s criteria for earnings, assets, and credit scores.

4. Defendant BERNADETTE NICHOLAS collected financial and other

information from potential borrowers and compiled it into a loan application package which she

sent to mortgage lending companies for review and which she knew contained information the

mortgage companies relied upon to determine whether they would provide financing to a

particular borrower.

5. Defendant BERNADETTE NICHOLAS had an ongoing business

relationship with defendant KEVIN D. McALLISTER. Defendant McALLISTER was a

commercial loan officer in Wilmington Trust Federal Savings Bank’s Wealth Advisory Services

Department.

6. Wilmington Trust Federal Savings Bank (“Wilmington Trust”) was a

financial institution, the deposits of which were insured by the Federal Deposit Insurance

Corporation (“FDIC”) since June 10, 1994, FDIC Certificate Number 33911.

7. Defendant KEVIN D. McALLISTER’s duties and responsibilities

included targeting borrowers who had liquid assets or the potential for liquid assets of

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approximately $1,000,000 the recruitment of borrowers seeking commercial or business loans

who met Wilmington Trust’s financial institution’s criteria for earnings, assets, and credit scores.

Defendant McALLISTER was authorized to approve commercial or business loans valued up to

$1,000,000.

8. Wilmington Trust did not pay referral fees to mortgage brokers.

9. Wilmington Trust had a policy that precluded its loan officers, including

defendant KEVIN D. McALLISTER, from accepting money, gifts, or other benefits that might

tend to influence their performance.

10. Defendants BERNADETTE NICHOLAS and KEVIN D.

McALLISTER fraudulently caused Wilmington Trust to fund loans totaling more than

$30,000,000 to borrowers who did not meet Wilmington Trust’s criteria for earnings, assets, and

credit scores and to pay fees to defendant BERNADETTE NICHOLAS totaling approximately

$1,200,000.

11. As the result of approving loans for unqualified loan applicants,

defendants BERNADETTE NICHOLAS and KEVIN D. McALLISTER fraudulently caused

losses to Wilmington Trust totaling more than $2,600,000.

12. From in or about 2000, to in or about 2006, in the Eastern District of

Pennsylvania, defendants

BERNADETTE NICHOLAS and

KEVIN D. McALLISTER

knowingly executed, and attempted to execute, and aided and abetted the execution of, a scheme

to defraud Wilmington Trust, and to obtain monies owned by and under the care, custody, and

control of that bank by means of false and fraudulent pretenses, representations, and promises.

3

THE SCHEME

It was part of the scheme that:

13. Defendant BERNADETTE NICHOLAS, in her capacity as a mortgage

broker, knowingly misrepresented material facts to Wilmington Trust, with the intent to deceive,

by submitting the following items, among others, to Wilmington Trust:

(a) mortgage loan documents containing inflated income and asset

figures for borrowers;

(b) falsified income tax returns for borrowers;

(c) mortgage loan documents containing the forged signatures of

borrowers;

(d) misrepresentations of the rental income cash flow of properties that

were under consideration for purchase by borrowers;

(e) appraisals that over-priced the properties that were the subject of

loan applications; and,

(f) falsified documents relating to the true source or amount of the

down payments being made by the borrowers.

14. Defendant KEVIN D. McALLISTER, together with defendant

BERNADETTE NICHOLAS, finalized false and fraudulent mortgage loan applications

submitted to Wilmington Trust on behalf of defendant BERNADETTE NICHOLAS’s clients.

15. Defendant KEVIN D. McALLISTER structured transactions to make it

falsely appear that residential or personal loans submitted to Wilmington Trust by defendant

BERNADETTE NICHOLAS were for commercial loans, when, in fact, as defendant

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McALLISTER well knew, they were not.

16. Defendant KEVIN D. McALLISTER ignored Wilmington Trust’s

criteria for the income, assets, and credit worthiness of unqualified mortgage loan applicants

whose application packages were submitted to Wilmington Trust by defendant BERNADETTE

NICHOLAS.

17. In return for approving the loans, defendant KEVIN D. McALLISTER

demanded and accepted bribes and kickbacks ranging from ½% to 1% of each loan from

defendant BERNADETTE NICHOLAS.

18. At the time of the closing of the loans, defendant KEVIN D.

McALLISTER caused Wilmington Trust to issue referral fee checks representing the equivalent

of 3% of each loan in order for defendant BERNADETTE NICHOLAS to pay the bribe and

kickback to defendant McALLISTER.

19. Defendant KEVIN D. McALLISTER fraudulently approved loans

brokered by defendant BERNADETTE NICHOLAS totaling approximately $30,000,000,

many of which went into mortgage foreclosure, causing losses to Wilmington Trust in excess of

$2,600,000.

20. Defendant KEVIN D. McALLISTER and BERNADETTE NICHOLAS

fraudulently caused Wilmington Trust to pay fees to defendant BERNADETTE NICHOLAS

totaling approximately $1,200,000 from the transactions structured through the fraudulent

scheme. Also through the fraudulent scheme, defendant KEVIN D. McALLISTER accepted

bribes and kickbacks totaling more than approximately $350,000 from the proceeds of the fees

paid to defendant BERNADETTE NICHOLAS.

5

21. After settlement of some of the loans, defendant BERNADETTE

NICHOLAS, to prevent the scheme to defraud Wilmington Trust from becoming detected and

to prevent immediate foreclosure action against loans which had become delinquent, caused

payments to be made to her loan clients’ Wilmington Trust accounts.

All in violation of Title 18, United States Code, Sections 1344 and 2.

6

COUNTS TWO THROUGH FIFTY-FIVE

THE GRAND JURY FURTHER CHARGES THAT:

At all times material to this indictment:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. On or about the dates listed below, each transaction constituting a separate

count of this indictment, in the Eastern District of Pennsylvania, defendants

BERNADETTE NICHOLAS and

KEVIN D. McALLISTER

knowingly made and caused to be made, and aided and abetted the making of, false statements to

Wilmington Trust for the purpose of influencing the actions of Wilmington Trust upon loans, in

that defendants BERNADETTE NICHOLAS and KEVIN D. McALLISTER caused to be

submitted to Wilmington Trust false loan applications in which the defendants falsely

represented loan applicants’ income, assets, and credit worthiness, and the appraised value of

properties.

COUNT LOAN APPLICANT APPROXIMATE DATE

OF LOAN

LOAN AMOUNT

2 K.A. 8/22/2005 $375,000

3 K.A. 1/14/2005 $365,000

4 D.A. and R.A. 4/26/2006 $210,000

5 D.A. and R.A. 7/19/2006 $210,000

6 L.A. 8/16/2005 $61,000

7 L.B. and E.B. 5/26/2005 $950,000

8 P.B. 1/26/2005 $275,000

7

COUNT LOAN APPLICANT APPROXIMATE DATE

OF LOAN

LOAN AMOUNT

9 C.S. 8/25/2004 $112,000

10 C.S. 4/5/2005 $17,000

11 P.C. and W.R. 5/4/2006 $68,000

12 A.D. 10/10/2003 $100,000

13 A.D. 8/1/2006 $400,000

14 A.D. 7/15/2003 $195,000

15 J.D. 12/21/2005 $110,000

16 J.D. 6/10/2004 $322,000

17 J.D. 6/28/2006 $160,000

18 D & T 7/16/2006 $35,000

19 D.F. 4/17/2006 $185,000

20 C.D. 8/25/2004 $23,000

21 C.D. 8/25/2004 $415,000

22 A.D. and M.D. 6/15/06 $1,700,000

23 Golden Key Group 10/20/2005 $300,000

24 Little Data Center 5/5/2004 $200,000

25 Little Data Center 6/6/2000 $100,000

26 Little Data Center 9/28/2006 $200,000

27 C.M. 3/30/2006 $425,000

28 V. M. 5/31/2006 $600,000

29 Bernadette Nicholas 10/11/2006 $100,000

30 K.N. 12/12/2005 $50,000

31 N.P. 7/18/2005 $64,000

32 N.P. 7/18/2005 $67,500

33 N.P. 3/4/2004 $56,000

8

COUNT LOAN APPLICANT APPROXIMATE DATE

OF LOAN

LOAN AMOUNT

34 N.P. 4/2/2004 $56,000

35 N.P. 2/2/2006 $35,000

36 N.P. 8/1/2005 $35,000

37 2204 Liberty 6/13/2005 $950,000

38 W.R. 12/15/05 $120,000

39 W.R. 6/6/2000 $140,000

40 S.R. 8/31/2006 $60,000

41 H.S. 3/30/2006 $195,000

42 H.S. 10/27/2005 $472,000

43 P.S. 5/31/2006 $750,000

44 S.S. 10/27/2005 $525,000

45 P.S. 10/12/2005 $1,000,000

46 P.S. 10/27/2005 $2,000,000

47 Sport-Tech Imaging 1/31/2005 $665,000

48 G. Z. 9/28/2006 $225,000

49 G.M. and T.M. 4/20/2006 $115,000

50 R.K. 1/7/2005 $215,000

51 J.K. 1/26/2005 $25,000

52 J.Q. and V.Q. 3/31/2006 $50,000

53 J.Q. and V.Q. 12/19/2003 $225,000

54 J.Q. and V.Q. 12/19/2003 $218,799

55 J.Q. and V.Q. 11/12/2004 $442,500

All in violation of Title 18, United States Code, Sections 1014 and 2.

9

COUNT FIFTY-SIX

(BANK BRIBERY)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. Between in or about 2004 and in or about 2006, in the Eastern District of

Pennsylvania, and elsewhere, defendant

BERNADETTE NICHOLAS

corruptly gave, offered, and promised something of value, that is, approximately $400,000, to

Kevin D. McAllister, a bank officer and employee of Wilmington Trust Federal Savings Bank,

with the intent to influence and reward McAllister in connection with transactions of

Wilmington Trust.

In violation of Title 18, United States Code, Section 215(a)(1).

10

COUNT FIFTY-SEVEN

(BANK BRIBERY)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. Between in or about 2004 and in or about 2006, in the Eastern District of

Pennsylvania, and elsewhere, defendant

KEVIN D. McALLISTER,

being an officer and employee of Wilmington Trust Federal Savings Bank, corruptly solicited

and accepted something of value for his benefit, that is, more than $1,000 in cash, intending to be

influenced and rewarded in connection with transactions of Wilmington Trust.

In violation of Title 18, United States Code, Section 215(a)(2).

11

COUNT FIFTY-EIGHT

(FILING FALSE AND FRAUDULENT INCOME TAX RETURN)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. On or about April 15, 2006, in the Eastern District of Pennsylvania,

defendant

BERNADETTE NICHOLAS

willfully made and subscribed a United States income tax return, Form 1040, for the calendar

year 2005, which was verified by a written declaration that it was made under the penalty of

perjury and filed with the Director, Internal Revenue Service Center, at Philadelphia,

Pennsylvania, which defendant BERNADETTE NICHOLAS did not believe to be true and

correct as to every material matter, in that the return reported total gross income of $208,455,

when, as defendant BERNADETTE NICHOLAS knew, her total gross income was at least

$367,928.90.

In violation of Title 26, United States Code, Section 7206(1).

12

COUNT FIFTY-NINE

(FILING FALSE AND FRAUDULENT INCOME TAX RETURN)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. On or about April 15, 2007, in the Eastern District of Pennsylvania,

defendant

BERNADETTE NICHOLAS

willfully made and subscribed a United States income tax return, Form 1040, for the calendar

year 2006, which was verified by a written declaration that it was made under the penalty of

perjury and filed with the Director, Internal Revenue Service Center, at Philadelphia,

Pennsylvania, which defendant BERNADETTE NICHOLAS did not believe to be true and

correct as to every material matter, in that the return reported total gross income of $231,000,

when, as defendant BERNADETTE NICHOLAS knew, her total gross income was at least

$304,584.50.

In violation of Title 26, United States Code, Section 7206(1).

13

COUNT SIXTY

(TAX EVASION)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. On or about May 31, 2005, in the Eastern District of Pennsylvania,

defendant

KEVIN D. McALLISTER,

a resident of Drexel Hill, Pennsylvania, who during calendar year 2004 was married, willfully

attempted to evade and defeat a large part of the tax due and owing by him and his spouse to the

United States of America for the calendar year 2004 by:

(1) filing and causing to be filed with the Director, Internal Revenue

Service Center, at Philadelphia, Pennsylvania, a false and fraudulent joint United States

individual income tax return, Form 1040, on behalf of himself and his spouse, in which it was

stated that his and his spouse’s total gross income was $214,215, but, as he then well knew and

believed that his and his spouse’s total gross income was approximately $300,220, and that upon

$300,220 income there was owing to the United States of America an additional tax of

approximately $29,339; and,

(2) concealing sources and amounts of his true and correct income by

making false and deceptive statements to the accountant who prepared his and his wife’s income

tax return.

In violation of Title 26, United States Code, Section 7201.

14

COUNT SIXTY-ONE

(TAX EVASION)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. On or about April 15, 2006, in the Eastern District of Pennsylvania,

defendant

KEVIN D. McALLISTER,

a resident of Drexel Hill, Pennsylvania, who during calendar year 2005 was married, willfully

attempted to evade and defeat a large part of the tax due and owing by him and his spouse to the

United States of America for the calendar year 2005 by:

(1) filing and causing to be filed with the Director, Internal Revenue

Service Center, at Philadelphia, Pennsylvania, a false and fraudulent joint United States

individual income tax return, Form 1040, on behalf of himself and his spouse, in which it was

stated that his and his spouse’s total gross income was $216,608, but, as he then well knew and

believed that his and his spouse’s total gross income was approximately $359,428, and that upon

$359,428 income there was owing to the United States of America an additional tax of

approximately $49,120; and,

(2) concealing sources and amounts of his true and correct income by

making false and deceptive statements to the accountant who prepared his and his wife’s income

tax return.

In violation of Title 26, United States Code, Section 7201.

15

COUNT SIXTY-TWO

(TAX EVASION)

THE GRAND JURY FURTHER CHARGES THAT:

1. Paragraphs 1 through 11 and 13 through 21 of Count One are realleged

here.

2. On or about April 15, 2007, in the Eastern District of Pennsylvania,

defendant

KEVIN D. McALLISTER,

a resident of Drexel Hill, Pennsylvania, who during calendar year 2006 was married, willfully

attempted to evade and defeat a large part of the tax due and owing by him and his spouse to the

United States of America for the calendar year 2006 by:

(1) filing and causing to be filed with the Director, Internal Revenue

Service Center, at Philadelphia, Pennsylvania, a false and fraudulent joint United States

individual income tax return, Form 1040, on behalf of himself and his spouse, in which it was

stated that his and his spouse’s total gross income was $247,930, but, as he then well knew and

believed that his and his spouse’s total gross income was approximately $398,180, and that upon

$398,180 income there was owing to the United States of America an additional tax of

approximately $52,858; and,

(2) concealing sources and amounts of his true and correct income by

making false and deceptive statements to the accountant who prepared his and his wife’s income

tax return.

In violation of Title 26, United States Code, Section 7201.

16

COUNT SIXTY-THREE

(BANK FRAUD)

THE GRAND JURY FURTHER CHARGES THAT:

At all times material to this indictment:

1. Defendant BERNADETTE NICHOLAS was an independent mortgage

broker, who maintained an office at her home on Camelot Lane, in Newtown Square,

Pennsylvania.

2. Defendant BERNADETTE NICHOLAS’s duties and responsibilities as

a mortgage broker included, among other things: (a) assisting borrowers who were seeking

financing to purchase properties or personal loans in completing mortgage loan application

forms; (b) gathering information about a borrower’s income, employment history, assets, and

financial obligations; and (c) locating a mortgage lending company that would be willing to

provide financing for the borrower. She handled borrowers’ loan applications from the time of

their preparation, the submission of the loan applications to financial institutions for approval,

and also attended the real estate closings where her clients’ loans were funded by financial

institutions.

3. Defendant BERNADETTE NICHOLAS represented borrowers who

were unable to obtain financing from banks and other finance companies at the lowest market

rates, leaving them with few options in the mortgage lending market, because the borrowers did

not meet most financial institution’s criteria for earnings, assets, and credit scores.

4. Defendant BERNADETTE NICHOLAS collected financial and other

information from potential borrowers and compiled it into a loan application package which she

sent to mortgage lending companies for review and which she knew contained information the

17

mortgage companies relied upon to determine whether they would provide financing to a

particular borrower.

5. Defendant BERNADETTE NICHOLAS was assisted in her mortgage

business and in her business ventures by a person known to the Grand Jury.

6. Defendant WAYNE ROSEN and a person known to the Grand Jury,

doing business as (“d/b/a”) Sport-Tech Imaging, Inc., were the owners of an apartment building

at 1528 Elmwood Avenue, in Folcroft, Pennsylvania.

7. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN and a

person known to the Grand Jury were the owners of RONIC, LLC, a limited liability

corporation, and CINOR, LP, a partnership.

8. Malvern Federal Savings Bank (“Malvern Federal”) was a financial

institution, the deposits of which were insured by the Federal Deposit Insurance Corporation

(“FDIC”) since January 8, 1947, FDIC Certificate Number 27861.

9. In 2006, defendant BERNADETTE NICHOLAS offered J.D. and D.D.

the opportunity to purchase an apartment building for $2.2 million from defendant WAYNE

ROSEN and a person known to the Grand Jury, d/b/a Sport-Tech Imaging, Inc., and to arrange

for a no money down mortgage for the purchase of the building with Malvern Federal.

10. In June 2005, CINOR, LP obtained loans from Malvern Federal and

Wilmington Trust Federal Savings Bank (“Wilmington Trust”) to fund the acquisition of a

medical building at 2301-2309 Pennsylvania Avenue, Philadelphia, Pennsylvania. In 2006,

defendants BERNADETTE NICHOLAS and WAYNE ROSEN and a person known to the

Grand Jury initiated activities, including the acquisition of a new appraisal, in order to refinance

the loans and get back their initial investment.

18

11. From in or about January 2006 through in or about March 2007, in the

Eastern District of Pennsylvania, defendants

BERNADETTE NICHOLAS and

WAYNE ROSEN

knowingly executed, and attempted to execute, and aided and abetted the execution of, a scheme

to defraud Malvern Federal, and to obtain monies owned by and under the care, custody, and

control of that bank by means of false and fraudulent pretenses, representations, and promises.

THE SCHEME

12. It was part of the scheme that defendants BERNADETTE NICHOLAS

and WAYNE ROSEN engaged in the following actions in order to obtain a loan for J.D. and

D.D. from Malvern Federal:

a. Defendant BERNADETTE NICHOLAS had J.D. and D.D. sign a

blank loan application, collected income and tax return information from J.D. and D.D., and

assumed the responsibility of filling out the remainder of the application for the purchase of the

apartment building. On the loan application that was submitted to Malvern Federal, defendant

BERNADETTE NICHOLAS overstated J.D. and D.D.’s income and liquid assets. Defendant

BERNADETTE NICHOLAS also falsified J.D. and D.D.’s income tax returns that were

submitted to Malvern Federal along with the loan application.

b. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN,

and others known to the Grand Jury, falsely represented to Malvern Federal that J.D. and D.D.

were making a $440,000 down payment and concealed the fact that J.D. and D.D. were seeking

to obtain 100% financing on the purchase of the apartment building.

c. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN,

19

and others known to the Grand Jury, misrepresented to Malvern Federal that defendant WAYNE

ROSEN and another person, as the sellers of the apartment building, were to hold a second

mortgage in the amount of $128,000, when defendants BERNADETTE NICHOLAS and

WAYNE ROSEN knew that the actual amount of the second mortgage was to be $568,000.

d. At the time of the settlement on J.D. and D.D.’s loan from Malvern

Federal, defendant WAYNE ROSEN and another person executed a subordination agreement

with Malvern Federal in which they falsely represented that their second mortgage was in the

amount of $128,000, not $568,000, and was subordinate to Malvern Federal’s $1,632,000 first

mortgage with J.D. and D.D.

e. Immediately after the settlement, without the knowledge of

Malvern Federal or the settlement company, defendant WAYNE ROSEN demanded that J.D.

and D.D. execute the second mortgage in the amount of $568,000.

13. It was also part of the scheme that defendants BERNADETTE

NICHOLAS and WAYNE ROSEN engaged in the following actions in order to obtain a loan

for CINOR, LP from Malvern Federal:

a. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN

and another person known to the Grand Jury filed documents with Malvern Federal to obtain a

$3,520,000 loan, including a $367,699.24 cash payout, to refinance loans CINOR, LP had with

Malvern Federal and Wilmington Trust.

b. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN

prepared and caused to be prepared false and fraudulent leases which purported to be between

CINOR, LP and physicians and Powerweb Technologies, Inc. for the rental of office space in

2301-2309 Pennsylvania Avenue, Philadelphia, Pennsylvania.

20

c. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN

submitted and caused the submission of the fraudulent leases to an appraiser.

d. Defendants BERNADETTE NICHOLAS and WAYNE ROSEN

caused the false and fraudulent leases and appraisal, representing the potential monthly cash flow

for CINOR, LP, to be submitted to Malvern Federal with the intent that the fraudulent leases and

appraisal would be relied upon by Malvern Federal in determining whether to refinance CINOR,

LP’s existing loans with Malvern Federal and Wilmington Trust and fund a new loan in the

amount of $3,520,000.

All in violation of Title 18, United States Code, Sections 1344 and 2.

21

COUNT SIXTY-FOUR

(LOAN APPLICATION FRAUD)

THE GRAND JURY FURTHER CHARGES THAT:

At all times material to this indictment:

1. Paragraphs 1 through 10, and 12 through 13 of Count Sixty-Three are

realleged here.

2. In or about August 2006, in the Eastern District of Pennsylvania,

defendants

BERNADETTE NICHOLAS and

WAYNE ROSEN

knowingly made and caused to be made, and aided and abetted the making of, false statements

to Malvern Federal for the purpose of influencing the actions of Malvern Federal upon a loan,

that is, a $1,632,000 loan for the purchase of 1039 Elmwood Avenue, in Folcroft, Pennsylvania,

in that defendant BERNADETTE NICHOLAS caused to be submitted to Malvern Federal a

false loan application and supporting documents in which she falsely represented the loan

applicants’ income and assets, and defendants BERNADETTE NICHOLAS and WAYNE

ROSEN falsely represented the existence of a down payment and the amount of the second

mortgage, when as the defendants knew, the loan applicants were obtaining 100% financing for

the purchase of the property and the second mortgage was $568,000, not $128,000.

In violation of Title 18, United States Code, Sections 1014 and 2.

22

COUNT SIXTY-FIVE

(LOAN APPLICATION FRAUD)

THE GRAND JURY FURTHER CHARGES THAT:

At all times material to this indictment:

1. Paragraphs 1 through 10, and 12 through 13 of Count Sixty-Three are

realleged here.

2. From in or about December 2005 to in or about March 2007, in the

Eastern District of Pennsylvania, defendants

BERNADETTE NICHOLAS and

WAYNE ROSEN

knowingly made and caused to be made, and aided and abetted the making of, false statements to

Malvern Federal for the purpose of influencing the actions of Malvern Federal upon a loan, that

is, a $3,520,000 loan, including a cash payout of $367,699.64, to refinance two existing loans

with Wilmington Trust and Malvern Federal for the Pennsylvania Avenue property, in that

defendants BERNADETTE NICHOLAS and WAYNE ROSEN caused to be submitted to

Malvern Federal a false loan application and supporting documents in which they falsely

represented that physicians and Powerweb Technology had executed leases to rent space in the

Pennsylvania Avenue property, when, as the defendants knew, the leases were falsely and

fraudulently made and contained the forged and fraudulently used names of the physicians and

owner of PowerWeb Technologies, Inc.

In violation of Title 18, United States Code, Sections 1014 and 2.

23

NOTICE OF FORFEITURE

THE GRAND JURY FURTHER CHARGES THAT:

1. As a result of the violations of Title 18, United States Code, Sections

1344, 1014, and 215, as set forth in Counts One through Fifty-Seven of this indictment,

defendants

BERNADETTE NICHOLAS and

KEVIN D. McALLISTER

shall forfeit to the United States of America any property that constitutes, or is derived from,

proceeds obtained directly or indirectly from the commission of such offense, including, but not

limited to, the sum of approximately $479,075.

2. If any of the property subject to forfeiture, as a result of any act or

omission of the defendants:

(a) cannot be located upon the exercise of due diligence;

(b) has been transferred or sold to, or deposited with, a third party;

(c) has been placed beyond the jurisdiction of the Court;

(d) has been substantially diminished in value; or

(e) has been commingled with other property which cannot be divided

without difficulty;

it is the intent of the United States, pursuant to Title 18, United States Code, Section 982(b),

incorporating Title 21, United States Code, Section 853(p), to seek forfeiture of any other

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property of the defendants up to the value of the property subject to forfeiture.

All pursuant to Title 18, United States Code, Section 982(a).

A TRUE BILL:

GRAND JURY FOREPERSON

ZANE DAVID MEMEGER

UNITED STATES ATTORNEY

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