12-21-05 -- Phillips, John A. "Jay" -- Sentencing -- News Release

Moorestown Businessman Sentenced To 36 Months In Prison for Wire Fraud in Connection with Fraudulent Mortgages

CAMDEN – A Moorestown businessman was sentenced to 36 months in federal prison today on a wire fraud charge arising out of his scheme to defraud several lending institutions of approximately $6.5 million by obtaining fraudulent mortgages through the use of his title insurance agency, U.S. Attorney Christopher J. Christie announced.

U.S. District Judge Freda L. Wolfson also ordered John A. “Jay” Phillips, 41, to pay $4,278,055 in restitution and to serve five years of supervised release upon the completion of his prison sentence. Judge Wolfson ordered Phillips to turn himself in to the federal Bureau of Prisons by Feb. 1, 2006, to begin serving his sentence.

On May 26, 2004, Phillips pleaded guilty to a one-count Information charging wire fraud affecting a financial institution.

According to the Information to which he pleaded guilty, Phillips owned and controlled Phillips Title Agency, Inc., in Pennsauken. The Information details a scheme in which Phillips fraudulently obtained more than 10 mortgage loans between October 1997 and January 2002.

At his plea hearing, Phillips admitted that he used a variety of means to accomplish the fraud. Phillips admitted he obtained loans in the names of relatives and acquaintances, and forged their signatures on loan documents. Phillips admitted he falsely represented to lending institutions that existing mortgage liens would be paid off in full as part of the loan closings, when in fact he intended to keep the funds for his own personal use. Phillips also admitted that, on occasion, he concealed existing mortgage liens from lending institutions. Through his ownership of a title company, Phillips was able to avoid controls traditionally put into place by a title company.

Phillips admitted that through this scheme, he obtained approximately $6.5 million in loan proceeds and converted that money to his own use instead of, among other things, paying off prior mortgage liens.

According to a statement at the sentencing hearing by Assistant U.S. Attorney Renée Bumb, Attorney-in-Charge of the Criminal Division in Camden, Phillips had cooperated with the U.S. Attorney’s Office for quite some time in connection with an investigation allegedly involving former public officials of the McGreevey administration in connection with the sale of billboards.

Phillips had faced a probable sentencing range of between 46 and 57 months under the advisory U.S. Sentencing Guidelines, for his guilty plea to one count of wire fraud. However, in consideration for his cooperation in the billboard investigation, he received a recommendation from the government for a sentence below the guideline range. The government recommended a sentence of at least 41 months.

Bumb told Judge Wolfson that part of Phillips’ cooperation has included affirmative investigative techniques including wearing a wire to tape record conversations.

In determining an actual sentence, Judge Wolfson consulted the advisory U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence.

Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.

Christie credited Inspectors of the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Thomas C. Van De Merlen, in Newark, with developing the investigation that led to the successful prosecution.

The Government is represented by Assistant U.S. Attorney Bumb, Attorney-in-Charge of the Criminal Division in Camden.

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Defense Attorney: Rocco Cipparone, Esq. Haddon Heights