Salvatore Favata sued

A former president of a residential mortgage business in California was recently sued on fraud charges by the US Securities and Exchange Commission (SEC) for up to $30 million. Salvatore Favata, formerly of National Consumer Mortgage, was found to have defrauded investors with false promises dating from 2001–6.

In promising investors returns of up to 30–60% on their investments, Favata was able to pay off previous investors. He also used his increasing fortunes to pay for gambling, house parties and community music festivals.

Favata accrued his riches through persuading people, face-to-face and sometimes in church, to part with their cash. He persuaded those unable to get mortgages to invest in his company, then acted as the lender for their property.

Favata has yet to either plead guilty or not guilty to these charges. He already finds himself in rough waters over a charge of mail fraud brought by the US Attorney's office for California, which could lead to his having to pay back more than $20 million and also face a substantial jail sentence.