Former Lend America exec Michael Ashley gets third delay in reporting to prison

The Long Island mortgage executive who pleaded guilty to bank fraud in the 2009 implosion of a $1-billion-a-year lender has been granted a third delay in the start of his prison term.

Michael Ashley, who held the title of chief business strategist at Melville-based Lend America, will be allowed to start his three-year term at Otisville Correctional Facility in upstate New York on March 1, instead of the previously scheduled date of Nov. 16, Judge Joseph Bianco ruled this week.

"Given the ongoing COVID-19 pandemic and the defendant’s medical conditions, the Court grants the request and extends the surrender date," the federal judge wrote. Bianco did not specify what the medical conditions were.

Ashley, 55, and his attorney Kevin Keating did not respond to requests for comment.

The collapse of Lend America left $49 million in federally backed loans unfunded, according to the Government National Mortgage Association, or Ginnie Mae, which guaranteed the loans.

In the involuntary bankruptcy case of Lend America’s parent company Ideal Mortgage Bankers, U.S. Bankruptcy Judge Dorothy Eisenberg wrote in 2013 that Ashley "diverted over $50 million of [Lend America's parent company's] money for his own benefit, and/or for the benefit of his affiliated entities or relatives."

The trustee in the bankruptcy case wrote in court papers that some borrowers who refinanced their mortgages were "led to believe that...their first mortgages were being paid off," but instead the company allegedly failed to pay off the mortgages and "created false documents" that allowed the company to sell the unfunded mortgages to investors. Many of Lend America's borrowers ended up in foreclosure, court records show.

The criminal case against Ashley dates to 2011, when Ashley pleaded guilty to bank fraud.

Lend America made more than $1 billion in mortgage loans during the 12-month period ending in September 2008, and Ashley was entitled to a $5.375 million cut, prosecutors wrote in a 2009 civil lawsuit. The company operated in 46 states.

In court testimony last year, Keating said Lend America’s losses were due to the company’s "staggering" expenses and the impact of the housing crisis.

Keating said Ashley had rebuilt his life and had been operating a real estate business since 2013 which was "run, obviously, fully lawfully."

In July 2019, Ashley was sentenced to three years in prison. He also was ordered to forfeit $800,000 and make restitution of $49 million, at a rate of $25 every three months while he is in prison, and 10% of his net monthly income during the five years of supervised release following his prison term.

Bianco granted a one-year delay in the start of his prison term so Ashley could care for his mother during her treatment for stage-four cancer, and so he could arrange for someone to take over his business affairs.

Earlier this year, Bianco granted Ashley’s request for a second delay. In his letter to the judge, Keating wrote that Ashley was operating a business called Rebuildny.com, also known as Realty Warehouse, which was shuttered due to the pandemic. The delay, he wrote, would "enable the company to reopen and stabilize, and for its employees to return to work."

In testimony in 2019, Ashley said Realty Warehouse is involved in buying and selling distressed property.

By Maura McDermott

maura.mcdermott@newsday.commauramcdermott

Maura McDermott covers health care and other business news on Long Island.