Michael McGrath, 46, former president of U. S. Mortgage Corp, a Pine Brook, New Jersey-based mortgage lender and broker that filed for bankruptcy in February, pleaded to one count of mail and wire fraud conspiracy, including one count of money laundering conspiracy charges, in a $139.6-million scheme for defrauding credit unions and others.

U. S. District Judge Katharine Hayden, who allowed McGrath's release on a $1-million bond to home confinement, scheduled a sentencing hearing for 1st October. Expected to go for a plea deal, McGrath is expected to be sentenced to 12-1/2 to 20-years, including paying restitution to the victims.

Between January 2004 to January 2009, McGrath and others conspired to fraudulently sell credit union loans, and use the proceeds for financing operations and investments for U. S. Mortgage and himself.

According to prosecutors, McGrath has admitted to selling mortgage loans to Fannie Mae without authorization of the credit unions that owned the loans, in order to offset bad investments made in mortgage-backed securities.

The $139-million fraud scheme that bankrupted the firm and saw it file for bankruptcy protection in February, has left U. S. Mortgage with creditors owed $200 million in unsecured claims, including $99.2-million to Fannie Mae and the rest to 19 credit unions.