U.S. District Judge Robert J. Conrad, Jr. sentenced two California residents to prison on Tuesday, August 26, 2014, for their role involving computer theft from a nation-wide online mortgage broker (the “company”).
Brian Matthew Rich, 40, of Laguna Beach, Calif., was sentenced to 24 months in prison, followed by two years of supervised release. Marcus Alan Avritt, 42, of Seal Beach, Calif. was sentenced to 15 months in prison and two years of supervised release. Judge Conrad also ordered both defendants to pay restitution to the company, the amount of which will be determined by the court at a later date.
According to filed court documents and court proceedings, Rich and Avritt were the co-owners of Chapman Capital, Inc., a California-based mortgage broker firm also doing business as “Home Loan Consultants.” Court records show that Rich and Avritt purchased unauthorized access to the victim company’s database, which contained data on consumers who had used the company’s online mortgage lending exchange network to apply for new and refinanced mortgage loans, from 2007 until January 2008. According to court records, Rich and Avritt purchased the unauthorized access from another California-based mortgage broker and co-defendant, Steve Kenneth Rosene. Court records indicate that Rosene had obtained the unauthorized computer access from the fourth member of the conspiracy, Jarrod Beddingfield, who was a former employee of the victim company.
According to court records, the victim company’s online mortgage lending exchange network facilitated millions of consumer loan requests for new and refinanced mortgages. Mortgage loan consumers used the internet to access the company’s network and to complete online mortgage application forms containing contact, non-public financial data and other information necessary to the mortgage application process. Court records indicate that the information submitted through this online process comprised the company’s mortgage referral information, known individually as “mortgage leads.” According to court documents, the mortgage referral information, which contained thousands of such individual mortgage leads, was valuable information because it consisted of mortgage loan consumers who were ready, willing and financially-able to close on mortgage loans, refinancing loans and home equity loans, court records show. By obtaining this information without paying the requisite fees and dues, Rich and Avritt avoided paying the victim company an estimated $745,152 for the stolen mortgage leads.
Avrit and Rich pleaded guilty in August and September 2013, respectively, to one count of conspiracy to illegally access and use the company’s customer database. The other two co-defendants, Rosene and Beddingfield, have also pleaded guilty to the same charge. Rosene has also pleaded guilty to one count of unauthorized computer access/exceeded authorized access for commercial advantage and financial gain. Rosene and Beddingfield will be sentenced by the court at a later date.
Avritt and Rich have been released on bond and will be ordered to the report to the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
SOURCE: U.S. Attorney’s Office, Western District of North Carolina
Note: Although the USAO’s press release does not name the victim company, this is the LendingTree breach that was disclosed in April 2008. LendingTree sued other mortgage brokers over the breach, and was also sued by customers. That lawsuit eventually went to binding arbitration.