Earl Gross, an ailing former mortgage company president, was given a light federal prison sentence Wednesday in an $8.4 million bank fraud scheme.
U.S. District Judge Andrew Gordon sentenced the 75-year-old Gross to 18 months behind bars with roughly nine months of credit for the time he served in custody after his arrest last year. Gordon also ordered Gross to serve the first six months of five years of supervised release in home confinement.
And the judge ordered Gross to pay the $8.4 million as restitution to the victim of the scheme, Wells Fargo Bank.
Gross, who ran the now-bankrupt U.S. Mortgage, spent more than six months as a fugitive in Spain following his federal indictment last year.
He was arrested in Spain in December 2012 and brought back to Las Vegas in January, where a federal magistrate judge ordered him detained while he faced the bank fraud charges.
Gross pleaded guilty to one count of bank fraud in June, and in September, his lawyer Paola Armeni persuaded Gordon to release him on $50,000 bail until his sentencing because of his failing health.
Armeni argued his serious heart, lung and kidney problems could be better addressed outside of federal custody. Gross, who now uses a wheelchair, has kidney dialysis three times a week and suffers from regular fainting spells as a result of the treatment.
On Wednesday, Brian Young, a trial attorney with the Justice Department’s Fraud Section in Washington, sought a 51-month prison sentence and argued that anything less than two years behind bars without credit for time served would not deter others from committing similar crimes.
“This is serious fraud,” Young said, arguing that Gross should not get a “free pass.”
From his wheelchair, Gross declined to address the judge in court.
But Armeni, again raising her client’s health problems, told Gordon that Gross was remorseful and had no other criminal record. She argued for a sentence of nine months credit for time served plus 12 months of home confinement while on probation.
Gordon opted for the compromise sentence that will force Gross to spend as much as nine months in federal custody.
The bank fraud scheme involving Gross was detailed in his February 2012 indictment. His company handled hundreds of loans for Wells Fargo Bank.
Between September 2004 and December 2006, Gross failed to transfer to Wells Fargo loan payoffs U.S. Mortgage collected and falsely reported to the bank that the company was still receiving monthly payments, the indictment alleged.
As of November 2006, according to the indictment, U.S. Mortgage reported that it had 190 loans with unpaid principal balances totaling roughly $22 million,
Instead of turning over the loan payoffs to Wells Fargo, Gross spent the money, the indictment alleged.
Contact reporter Jeff German at email@example.com or 702-380-8135. Follow him on Twitter @JGermanRJ.