More than 700 Pennsylvania consumers lost $40 million in a mortgage scheme that collapsed during last year's credit crunch, according a consumer protection lawsuit filed today in Berks County by State Attorney General Tom Corbett.
Under the scheme, operated by a group of Berks County companies owned by Wesley A. Snyder, consumers took out a mortgage for more than they needed. Snyder took the extra money, promising to invest it and use the proceeds to reduce the borrowers' monthly payment.
"In realty, the money from new loans and new investments was used to pay off older accounts, conceal company losses, and support OPFM until the entire scheme collapsed in late 2007," Corbett said in a statement.
The 88-page lawsuit charges Snyder, his wife and seven others employed by his companies with violations of Pennsylvania consumer-protection laws.
The "Ponzi" scheme nabbed 19 victims from Chester County and 12 from Montgomery County, authorities said.