March 12, 2014
Armando Granillo viewed the kickbacks as commonly accepted behavior and did not intend to defraud Fannie Mae, his lawyer says.
Armando Granillo is accused of defrauding Fannie Mae by failing to get the best possible prices at foreclosure sales, instead promising to provide Arizona broker Angus “Gus” Maughan unlimited foreclosure listings in a preferential deal.
A former Fannie Mae employee accused of soliciting kickbacks from a real estate broker in return for foreclosure listings regarded the practice as commonly accepted behavior.
His defense lawyers said Wednesday in a Santa Ana courtroom that the former employee had no intention of defrauding the home finance giant last year when he accepted $11,200 in cash in what turned out to be a videotaped federal sting.
The unusual explanation came on behalf of Armando Granillo, 44, a foreclosure specialist at a Fannie Mae Western regional office in Irvine. Before his arrest in May, he had spent 3 1/2 years overseeing brokers as they cleaned up and sold the foreclosed homes that had swamped Fannie Mae, requiring a $116-billion taxpayer bailout during the subprime mortgage meltdown.
Granillo is accused of defrauding Fannie Mae by failing to get the best possible prices at foreclosure sales, instead promising to provide Arizona broker Angus “Gus” Maughan unlimited foreclosure listings in a preferential deal.
According to conversations recorded by prosecutors, the deal was for Granillo to “cherry-pick” prime listings and make Maughan the No. 1 broker in the Tucson area — but he demanded in return a 20% cut of the commissions that Maughan earned.
“The scheme might have worked except for one thing,” Assistant U.S. Atty. Stephen Goorvich said during opening statements. “Mr. Maughan called the authorities,” who secretly recorded a series of meetings, including Granillo grabbing a cash-stuffed envelope in what was to have been the first in a series of payments.
Deputy Public Defender Jeffrey A. Aaron, one of Granillo’s attorneys, acknowledged during his opening statement that “much of what the government told you is not disputed.”
“But there’s more than that,” Aaron said. “The evidence in this case is going to show you that Mr. Granillo was a Fannie Mae employee working under extraordinarily difficult circumstances and extraordinary stress to fulfill what he was told was Fannie Mae’s mission.”
Aaron said Granillo and other sales representatives were under enormous pressure to get the foreclosures off Fannie Mae’s books. Crediting Fannie Mae’s recent return to profitability to the efforts of Granillo and his colleagues, he said the case would prove “surprising” to the eight-woman, four-man jury.
“The evidence will show yes, Mr. Granillo did intend to deceive,” Aaron said. “But he intended to deceive Mr. Maughan and not Fannie Mae.”
In fact, Aaron said, the defense would show that Granillo could not have delivered on his promises to Maughan because he had no authority to “cherry-pick” properties or to approve their sale at less than market value, as the government contends, without review by higher-ups.
“He did what he believed to be the mission of Fannie Mae — to preserve, deliver and sell properties as fast as he could,” Aaron said.
It was unclear whether evidence from Cecelia Carter, another Fannie Mae foreclosure specialist in Irvine, would be introduced to bolster Granillo’s contention that kickbacks were widespread and tolerated at the government-backed company.
In a pending state court lawsuit, Carter contends Fannie Mae fired her in 2011 after she tried to expose widespread corruption, including her belief that Mary Irvine, a supervisor who oversaw both her and Granillo, was among those accepting kickbacks for property listings. She and Granillo have said they discussed the kickbacks and the agency’s lack of interest in doing anything about them.
In remarks out of the presence of the jury, U.S. District Judge David O. Carter — no relation to Cecelia — expressed dismay that Carter was traveling out of the country with her daughter and not available to testify.
“It’s my fault, your honor,” said Deputy Public Defender David Israel Wasserman, representing Granillo. “She should have been subpoenaed.”
Since 2009, Fannie Mae, the nation’s biggest buyer of home loans, has been a treasure trove of lucrative foreclosure listings — a premium commodity for brokers, as buyers and investors swarmed for bargains in beaten-down housing markets such as California and Arizona.