The Long Island mortgage executive who pleaded guilty to bank fraud in the implosion of a $1-billion-a-year lender that led to more than $49 million in losses was sentenced Wednesday to 3 years in prison.
Michael Ashley, 53, of Plainview, also was ordered by Judge Joseph Bianco in federal court in Central Islip to pay $49 million in restitution and forfeit $800,000. Ashley has already forfeited that full amount, the judge noted.
Bianco cited Ashley's cooperation in numerous other prosecutions for the 3-year sentence, and said Ashley did not commit fraud for personal gain, but rather in an effort to cope with his company's losses. Federal law allows for prison sentences of up to 30 years for bank fraud.
"I don't have any concern that you're not truly remorseful," Bianco said to Ashley. "I know you're a changed man."
But, he said, "This was not a small crime, and no matter how it started, it led to $50 million in losses." He also said Ashley bears more responsibility than his co-conspirators since Ashley was in charge of Lend America, the mortgage company that collapsed in 2009.
Bianco said he would allow Ashley to take as long as a year to spend time with his mother while she is treated for stage-four cancer and to arrange for someone else to take over his business affairs.
Ashley’s attorney, Kevin Keating, had asked the judge not to impose a prison sentence. He cited Ashley’s “extraordinary” cooperation in numerous other criminal cases over the last 10 years.
Although the losses caused by Lend America’s collapse were massive, they were caused by the company’s “staggering” expenses and the impact of its own lender’s sudden imposition of much more restrictive standards when the housing crisis hit, Keating said.
“If Michael was lining his pockets, it’s a different story,” Keating said. “He wasn’t.”
Ashley has since rebuilt his life; he has operated a real estate business since 2013 and “it is run, obviously, fully lawfully,” Keating said.
Ashley addressed the judge before the sentence was handed down, his voice breaking as he spoke about his mother’s ongoing battle with cancer and his remorse about the impact of his actions on his wife of 28 years, Mindy, as well as his two grown children.
“I know that I haven’t been behind bars, clearly,” Ashley said. But, he said, “this is the worst punishment, living with your head in the guillotine for 10 years. There is no freedom.”
Assistant U.S. Attorney Martin Coffey told the judge the case called for a “balanced approach” that takes into account both the magnitude of the financial loss and also the “substantial assistance” Ashley provided in other cases.
After the hearing, Ashley declined to comment. Keating said he and his client are considering an appeal.
Ashley is one of the few financial executives to be sentenced to prison time for crimes committed during the lead-up to the housing crash.
He pleaded guilty in 2011 to committing bank fraud in his leadership role at Lend America, the Melville-based mortgage giant that collapsed in 2009. The company’s failure left more than $49 million in loans unfunded, according to the Government National Mortgage Association, or Ginnie Mae, which guaranteed the loans.
In an agreement with federal officials investigating Lend America’s collapse, Ashley agreed in 2010 to be barred from any involvement in federally backed loans.
In testimony in March, Ashley said he is now president of a company called Realty Warehouse, which he said is involved in “buying and selling distressed property.”
Realty Warehouse is located in the same office building that once housed Lend America.
Three other Lend America executives have pleaded guilty and been sentenced. None have served time.