According to court testimony, Sabine State Bank provided a line of credit to First Fidelity Mortgage, monies that were in turn used by First Fidelity to fund mortgages for its customers. This line of credit at Sabine State Bank was secured by the customer notes pledged by First Fidelity.

As previously reported on Mortgage Fraud Blog, Nichols devised a scheme by which he prepared fraudulent notes by forging signatures of borrowers and notaries public, and would then deliver them to Sabine State Bank as collateral in order to cause the bank to deposit more money into First Fidelity Mortgage’s account. When the bank would deposit funds into the account to fund these loans, Nichols just kept the money for himself. In total, Nichols defrauded the bank out of $2.9 million.

Forging signatures of borrowers and notaries? While others have certainly done larger scale frauds, this is probably the boldest one I’ve read about, and one with a very limited time frame until discovery.