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Burlington, VT - (January 16, 2008) - The Office of the United States Attorney for the District of Vermont announced that Richard Shumway, 50, of Brewerton, New York, pleaded not guilty today in United States District Court in Burlington to federal wire and bank fraud charges. U.S. Magistrate Judge Jerome J. Niedermeier released Shumway on conditions pending trial, which has not been scheduled.
On January 3, 2008, a federal grand jury in Burlington returned a two-count indictment charging Shumway with mail fraud and bank fraud. Both charges stem from the activities of TSC Funding, a South Burlington-based mortgage brokerage business Shumway owned and operated in the 1990s until 2005. According to the indictment, Shumway skimmed several thousand dollars from each of more than 200 loans he brokered by means of payments taken outside of closing, without the knowledge of the borrower. As part of the scheme, Shumway arranged for Gerald Mullaney, formerly a licensed real estate appraiser in the Albany, New York area, to prepare falsified appraisals for the homes the borrowers were purchasing. This enabled Shumway to induce the borrower to take out a larger loan than necessary to buy the home, and also enabled Shumway to divert some of the proceeds of each loan to his own benefit. Shumway misled borrowers into believing the extra fees were to be paid to the lending institution to obtain a lower interest rate.
Shumway faces up to 30 years of imprisonment and a fine of up to $1 million. The actual sentence will be determined with reference to federal sentencing guidelines.
Gerald Mullaney has already pled guilty to bank fraud and is awaiting sentencing.
This case was investigated by the Burlington, Vermont office of the Federal Bureau of Investigation. The investigation into this fraud continues and other persons may face charges in the future.
Shumway is represented by Paul Volk. The prosecutor is Assistant U.S. Attorney Gregory Waples.
SOURCE: United States Department Of Justice - District Of Vermont
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