New York Prosecutors Charge Former Mortgage Exec With $4 Billion Stock Fraud

New York, N.Y. (AHN) - New York City prosecutors charged Thursday with securities and wire fraud the former treasurer and senior executive vice president of a mortgage bank for alleged stock price manipulation from 2001 to 2005 that caused shareholders to lose about $4 billion.

The U.S. Attorney for the Southern District of New York filed the charges against Mario S. Levis, who formerly worked for the Puerto Rico-based Doral Financial Corp. Indictment papers accused Levis, 44, of fraudulently manipulating the publicly reported value of certain core assets of Doral in order to artificially inflate the market price of the bank's common stock.

Prosecutors alleged that Levis undermined the independence of supposed 'outside' valuations of the company's interest-only strips by directing the fabrication of certain documents about the purported quarterly valuations from one firm and providing false data to another outside firm, which inflated the value.

Doral subsequently restated some or all of its financial statements from Jan. 1, 2000 to Dec. 31, 2004 to correct its method of calculating the fair value of its portfolio of floating-rate interest-only strips.

According to Stockhouse.ca, Levis' lawyer said his client is being singled out "when a number of financial companies have suffered from a crisis in the mortgage market in recent years."

The lawyer, Roy Black, also said Levis' action of not selling his stocks despite the financial setback of the bank showed he did not defraud anyone.

Levis' family owned 9.2 million shares or 8.2 percent of Doral stocks as of March 2005. Levis quit the firm in August 2005.