Richmond businessman convicted in connection with $200 million bond fraud scheme

Crime

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NEW YORK (WRIC) — Michael Hild, the founder and former chief executive officer of Richmond-based Live Well Financial, Inc., was convicted Friday of securities fraud, wire fraud and bank fraud charges, according to the U.S. Attorney’s Office for the Southern District of New York.

U.S. Attorney Audrey Strauss said the charges were brought against Hild in connection with a scheme to fraudulently inflate the value of a portfolio of bonds owned by Live Well in order to persuade various securities dealers and at least one financial institution into loaning more money to the company.

“As a unanimous jury found, Michael Hild obtained millions of dollars in secured loans for Live Well Financial by grossly inflating the value of bonds used as collateral,” Strauss said. “Lenders were hoodwinked into lending far more than they otherwise would have. The house of cards came crashing down with the unwinding of Live Well and the revelation to lenders that the bond portfolio had been overvalued by $200 million.”

According to a release, the scheme allowed Live Well to grow its bond portfolio exponentially, from approximately 20 bonds with a stated value of roughly $50 million in 2014 to approximately 50 bonds with a stated value of more than $500 million by the end of 2016.

Live Well started out as a mortgage originator, servicer and investor, licensed to operate in 46 states throughout the U.S.

According to evidence presented during the trial, in or about 2014, Live Well acquired a portfolio of approximately 15 bonds, each entitling the holder to receive a portion of the interest payments from a particular pools of reverse mortgages, known as HECM IO bonds. HECM is a type of Federal Housing Administration (FHA) insured reverse mortgage. Prosecutors said that Live Well purchased the bond portfolio for roughly $50 million.

Around that same time, Hild established a New York City-based trading desk for Live Well to manage and grow the company’s bond portfolio, according to a release.

“Hild deceived a third-party pricing service by providing it with inflated marks, resulting in the pricing service publishing valuations for the bonds far in excess of market value,” Strauss said. “Now, Michael Hild awaits sentencing for his crimes.”

The U.S. Attorney’s Office for the Southern District of New York said that Hild was convicted of five counts: one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire and bank fraud, which carries a maximum sentence of 30 years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 30 years in prison; and one count of bank fraud, which carries a maximum sentence of 30 years in prison.

Hild is scheduled to be sentenced on August 20. The charges also contain a maximum fine of $5 million, or twice the gross gain or loss from the offense.

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