Former Live Well ‘bond guru’ who made secret recordings gets no prison time for role in pricing scheme

stumbergercomposite

Darren Stumberger came to Live Well when the company acquired a bond trading desk from a Wall Street firm.

Another former Live Well Financial employee who had a hand in the scheme that caused the collapse of the Chesterfield-based mortgage company is walking away with no prison time.

Darren Stumberger, the company’s former head bond trader, was sentenced last week in federal court in Manhattan to time served, meaning no additional time behind bars.

Court records show he also was ordered to forfeit $1 million in bonuses that he earned as a result of the fraud and to three years of supervised release.

The leniency was a result of Stumberger’s extensive cooperation with federal prosecutors, including serving as a key witness in the trial against his former boss, Live Well founder and CEO Michael Hild.

Stumberger also helped the case by turning over recordings he secretly made during his time at Live Well, in which he, Hild and others discussed their bond pricing decision-making.

Stumberger, Hild and former Live Well CFO Eric Rohr were arrested and charged in 2019 on five counts, including securities fraud, bank fraud and mail fraud, stemming from a scheme that falsely inflated the value of the company’s reverse mortgage bonds. It then used those bonds as collateral for tens of millions of dollars in loans, while lying to the banks about how the loan values were calculated.

Those banks ultimately forced the company into bankruptcy liquidation, a process that continues today.

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The federal courthouse in Manhattan where Stumberger’s sentencing was held.

Rohr and Stumberger pleaded guilty and cooperated with the government’s investigation and remained free on bond. Rohr was sentenced earlier this year to time served. Hild pleaded not guilty and left his fate in the hands of a jury during a three-week trial in 2021. He was convicted on all counts and sentenced earlier this year to 44 months in prison but remains free on bond while appealing the verdict.

At Stumberger’s sentencing hearing on Friday, federal prosecutors, Stumberger’s attorney and U.S. District Court Judge Ronnie Abrams each explained why leniency was in order, according to a transcript obtained by Richmond BizSense.

Assistant U.S. Attorney Scott Hartman highlighted for the court how Stumberger was among the first Live Well employees involved in the scheme to come forward and cooperate with federal authorities. He did so by contacting the Securities and Exchange Commission prior to any criminal charges and even prior to Live Well’s collapse.

“Mr. Stumberger, to his credit, without Mr. Hild knowing it, reached out directly to the SEC and indicated a willingness to meet with them and cooperate,” Hartman said. “And I’ll note that was well before Live Well declared bankruptcy, well before the writing was on the wall, as it were, that Live Well was going to collapse.”

Hartman emphasized the importance of Stumberger’s testimony during Hild’s trial.

“Mr. Stumberger really is fairly brilliant when it comes to these bonds. I’m not sure anyone else that we met with could explain it as clearly as Mr. Stumberger could,” Hartman said.

Asked by Judge Abrams whether Stumberger was more culpable in the fraud than Rohr, Hartman said it could go either way, but that Stumberger “provided the sort of intellectual cover story, the framework that allowed the defendants to carry out this fraud.”

“I think neither of them is as culpable as Mr. Hild, from our perspective. And Mr. Hild was ultimately the person who was driving this,” Hartman said.

Stumberger’s attorney, Xavier Donaldson, spoke at length about his client during the hearing. Donaldson said in his 30 years of practicing law he’s never spoken to a client more than he has with Stumberger during this case.

“I think I may have spoken to him well over 500 times, easy. And that’s because I honestly had never met anyone like Mr. Stumberger,” Donaldson said, adding that Stumberger’s case is one of the steepest falls from grace he’s ever seen.

Stumberger, 50, grew up in South Florida and played professional baseball, mainly in the minor leagues. He then left baseball to go back to college and worked his way through the financial industry before becoming an expert in bonds.

Donaldson described his client as a hard-working man, husband and father whose life took a turn when he ended up at Live Well after the company acquired the reverse mortgage bond trading desk from a Wall Street firm where Stumberger had worked.

“Then he got to Live Well and the cards fell, and I don’t actually know why that happened,” Donaldson said.

Donaldson said his client’s crimes and the related fallout has taken Stumberger “from a millionaire status to a hundred-thousand dollar status to broken status… I mean rock bottom was where he went.”

Stumberger is now working as a delivery driver for Amazon in Florida, Donaldson said.

Stumberger also addressed Abrams, albeit briefly.

“I just want to say how sorry I am. I think about it every day,” he told the judge. “I exercised poor judgment. I’m very sorry for putting my family through this. If I can go back and do things differently, I would. I just want to be a good example to my kids and just going to move on and find peace. That’s all.”

Judge Ronnie Abrams

Judge Ronnie Abrams (Photo by Encycloeditfun)

Abrams, who also presided over Rohr’s case and continues to handle the Hild saga, said federal sentencing guidelines called for a range of 8-10 years in prison for Stumberger, but that judges are not obligated to follow those guidelines.

Abrams said she weighed the effect of Stumberger’s crimes, as well as that of his cooperation with the Hild case and his actions in his personal life since he was arrested.

“Sentencing is always hard… but it’s hard in a case like this where I have before me a person who committed a serious crime for a lengthy period of time that caused real harm to real people, but he also did whatever he could to redeem himself,” Abrams said. “And Mr. Stumberger, as you know, this crime could not have been possible without your participation, without your expertise. You were the so-called reverse mortgage bond guru…”

But, Abrams said, Stumberger was the first Live Well employee to cooperate with federal investigators after he learned Live Well and Hild had been subpoenaed.

“Most people cooperate after they’re arrested and not before,” Abrams said. “So while you were clearly central to effecting the fraud, you were also critical to bringing that fraud to light and securing the conviction of others.”

Stumberger also will likely pay restitution, pending the outcome of an ongoing debate in the Hild case over the restitution amount. The government wants $69 million for Hild’s victims, which are several large lenders, while Hild has argued for no restitution. Hild, Stumberger and Rohr will all have to pay a share of whatever amount is decided.

In closing, Abrams gave Stumberger the same advice she gave Hild at sentencing: “I often say at sentencing, because I firmly believe it to be true, I don’t think people need to be defined by the worst mistakes they’ve ever made.

“I know the life as you knew it doesn’t exist anymore, but you have made a new life for yourself,” Abrams said. “I think you have shown your kids and the world what it means to try and right your wrongs, what redemption looks like, what resilience looks like.”

stumbergercomposite

Darren Stumberger came to Live Well when the company acquired a bond trading desk from a Wall Street firm.

Another former Live Well Financial employee who had a hand in the scheme that caused the collapse of the Chesterfield-based mortgage company is walking away with no prison time.

Darren Stumberger, the company’s former head bond trader, was sentenced last week in federal court in Manhattan to time served, meaning no additional time behind bars.

Court records show he also was ordered to forfeit $1 million in bonuses that he earned as a result of the fraud and to three years of supervised release.

The leniency was a result of Stumberger’s extensive cooperation with federal prosecutors, including serving as a key witness in the trial against his former boss, Live Well founder and CEO Michael Hild.

Stumberger also helped the case by turning over recordings he secretly made during his time at Live Well, in which he, Hild and others discussed their bond pricing decision-making.

Stumberger, Hild and former Live Well CFO Eric Rohr were arrested and charged in 2019 on five counts, including securities fraud, bank fraud and mail fraud, stemming from a scheme that falsely inflated the value of the company’s reverse mortgage bonds. It then used those bonds as collateral for tens of millions of dollars in loans, while lying to the banks about how the loan values were calculated.

Those banks ultimately forced the company into bankruptcy liquidation, a process that continues today.

nyfederalcourt2 525x700 1

The federal courthouse in Manhattan where Stumberger’s sentencing was held.

Rohr and Stumberger pleaded guilty and cooperated with the government’s investigation and remained free on bond. Rohr was sentenced earlier this year to time served. Hild pleaded not guilty and left his fate in the hands of a jury during a three-week trial in 2021. He was convicted on all counts and sentenced earlier this year to 44 months in prison but remains free on bond while appealing the verdict.

At Stumberger’s sentencing hearing on Friday, federal prosecutors, Stumberger’s attorney and U.S. District Court Judge Ronnie Abrams each explained why leniency was in order, according to a transcript obtained by Richmond BizSense.

Assistant U.S. Attorney Scott Hartman highlighted for the court how Stumberger was among the first Live Well employees involved in the scheme to come forward and cooperate with federal authorities. He did so by contacting the Securities and Exchange Commission prior to any criminal charges and even prior to Live Well’s collapse.

“Mr. Stumberger, to his credit, without Mr. Hild knowing it, reached out directly to the SEC and indicated a willingness to meet with them and cooperate,” Hartman said. “And I’ll note that was well before Live Well declared bankruptcy, well before the writing was on the wall, as it were, that Live Well was going to collapse.”

Hartman emphasized the importance of Stumberger’s testimony during Hild’s trial.

“Mr. Stumberger really is fairly brilliant when it comes to these bonds. I’m not sure anyone else that we met with could explain it as clearly as Mr. Stumberger could,” Hartman said.

Asked by Judge Abrams whether Stumberger was more culpable in the fraud than Rohr, Hartman said it could go either way, but that Stumberger “provided the sort of intellectual cover story, the framework that allowed the defendants to carry out this fraud.”

“I think neither of them is as culpable as Mr. Hild, from our perspective. And Mr. Hild was ultimately the person who was driving this,” Hartman said.

Stumberger’s attorney, Xavier Donaldson, spoke at length about his client during the hearing. Donaldson said in his 30 years of practicing law he’s never spoken to a client more than he has with Stumberger during this case.

“I think I may have spoken to him well over 500 times, easy. And that’s because I honestly had never met anyone like Mr. Stumberger,” Donaldson said, adding that Stumberger’s case is one of the steepest falls from grace he’s ever seen.

Stumberger, 50, grew up in South Florida and played professional baseball, mainly in the minor leagues. He then left baseball to go back to college and worked his way through the financial industry before becoming an expert in bonds.

Donaldson described his client as a hard-working man, husband and father whose life took a turn when he ended up at Live Well after the company acquired the reverse mortgage bond trading desk from a Wall Street firm where Stumberger had worked.

“Then he got to Live Well and the cards fell, and I don’t actually know why that happened,” Donaldson said.

Donaldson said his client’s crimes and the related fallout has taken Stumberger “from a millionaire status to a hundred-thousand dollar status to broken status… I mean rock bottom was where he went.”

Stumberger is now working as a delivery driver for Amazon in Florida, Donaldson said.

Stumberger also addressed Abrams, albeit briefly.

“I just want to say how sorry I am. I think about it every day,” he told the judge. “I exercised poor judgment. I’m very sorry for putting my family through this. If I can go back and do things differently, I would. I just want to be a good example to my kids and just going to move on and find peace. That’s all.”

Judge Ronnie Abrams

Judge Ronnie Abrams (Photo by Encycloeditfun)

Abrams, who also presided over Rohr’s case and continues to handle the Hild saga, said federal sentencing guidelines called for a range of 8-10 years in prison for Stumberger, but that judges are not obligated to follow those guidelines.

Abrams said she weighed the effect of Stumberger’s crimes, as well as that of his cooperation with the Hild case and his actions in his personal life since he was arrested.

“Sentencing is always hard… but it’s hard in a case like this where I have before me a person who committed a serious crime for a lengthy period of time that caused real harm to real people, but he also did whatever he could to redeem himself,” Abrams said. “And Mr. Stumberger, as you know, this crime could not have been possible without your participation, without your expertise. You were the so-called reverse mortgage bond guru…”

But, Abrams said, Stumberger was the first Live Well employee to cooperate with federal investigators after he learned Live Well and Hild had been subpoenaed.

“Most people cooperate after they’re arrested and not before,” Abrams said. “So while you were clearly central to effecting the fraud, you were also critical to bringing that fraud to light and securing the conviction of others.”

Stumberger also will likely pay restitution, pending the outcome of an ongoing debate in the Hild case over the restitution amount. The government wants $69 million for Hild’s victims, which are several large lenders, while Hild has argued for no restitution. Hild, Stumberger and Rohr will all have to pay a share of whatever amount is decided.

In closing, Abrams gave Stumberger the same advice she gave Hild at sentencing: “I often say at sentencing, because I firmly believe it to be true, I don’t think people need to be defined by the worst mistakes they’ve ever made.

“I know the life as you knew it doesn’t exist anymore, but you have made a new life for yourself,” Abrams said. “I think you have shown your kids and the world what it means to try and right your wrongs, what redemption looks like, what resilience looks like.”

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CM Reynolds
CM Reynolds
8 months ago

Could Judge Ronnie Abrams (nice glamour shot by the way) flatter this guy anymore? I’m genuinely surprised she didn’t walk him across the street and get him a 7-figure job with whatever hedge fund is down the block. Did she bar him from ever holding a job in the financial industry ever again? Without jail time, I think that would at least be something. Forget about a slap on the wrist, this guy got a kiss on the wrist.

David Adler
David Adler
8 months ago
Reply to  CM Reynolds

Yea great picture of the federal courthouse too! (sheesh)

Tomar Hill
Tomar Hill
8 months ago
Reply to  CM Reynolds

With those felonies on his record, which are related to financial crimes, she didn’t have to bar him.

CM Reynolds
CM Reynolds
8 months ago
Reply to  Tomar Hill

Tomar, did you happen to see the comment below? According to his LinkedIn, he currently works in the mortgage industry. Tell me again why she shouldn’t have to bar him?

Michelle Reynolds
Michelle Reynolds
8 months ago
Reply to  CM Reynolds

That recent linkedin entry since 2019 is likely just a “company” of one person. Him. With the LLC being incporated out of his house. I doubt anybody is actually employing him.

If somebody said he should be barred from Financial industry for another 5 years I wouldn’t argue against it. But given Judge Abrams initially tried to give Hild a paltry 44 month sentence I can’t see how the initial cooperator deserves any time in prison.

Tomar L Hill
Tomar L Hill
8 months ago
Reply to  CM Reynolds

Yes, I did. But anyone can put anything on LinkedIn as you are aware. I’m not against a ban, I was just saying it’ll be hard for him to get a job at any reputable company with his record.

Last edited 8 months ago by Tomar L Hill
Martha Lee
Martha Lee
8 months ago
Reply to  Tomar Hill

It’s about optics. Bar him.

Jessica Chiraneau
Jessica Chiraneau
8 months ago

Amazon Driver?!? …and yet according to his Linkedin, he is a Strategic Mortgage Advisor with Mortgage Asset Trading Strategies LLC. This is a clown show, and represents everything wrong with our country and financial system.

https://www.linkedin.com/in/c-darren-stumberger/

Ed Christina
Ed Christina
8 months ago

You mean Live Well Finacial was a clown show, and represented  everything wrong with our country and financial system. How much money and property is Hild still hiding and “putting in his wifes name” still

Michelle Reynolds
Michelle Reynolds
8 months ago

I don’t really have a problem with no jail time for this guy since he was the initial cooperator. But Hild needs to serve time. And the time needs to be more severe than the 44 months this judge initially handed out. Anything less than 8 years for Hild would be farce.

Steven Cohen
Steven Cohen
8 months ago

Cooperation warrants some leniency from the government, but this is ridiculous. Moe Mathews got 41 months for his crime that is less than this and Hild gets 44 months and his crime and the magnitude of the fraud was so much more calculated. But judge…“I just want to say how sorry I am. I think about it every day,” he told the judge. “I exercised poor judgment. I’m very sorry for putting my family through this. If I can go back and do things differently, I would. I just want to be a good example to my kids and just… Read more »

Bruce Milam
Bruce Milam
8 months ago

Think Elliott Gould satirizing Tom Selleck for selling his soul while marketing reverse mortgages in television ads during the hilarious comedy “The Kominsky Method”. If you haven’t seen it, do. It’s funny.

Brett Themore
Brett Themore
8 months ago

There is another guy in the news recently who is well known and currently on trial for inflating value of assets. He is also know for inflating the size of his hands.

https://www.washingtonpost.com/politics/2023/10/10/trump-fraud-trial-property-value-wealth/

kay christensen
kay christensen
8 months ago
Reply to  Brett Themore

And we have a Marxist puppet who is overseeing the destruction of the country…

jay levine
jay levine
8 months ago

“ relating to or denoting the political and economic theories of Karl Marx and Friedrich Engels.”

That is such a dumb comment. While Biden is cut from the now discredited brand of New Deal liberal policies, he is no Marxist. On the other hand, it is simple fact that Trump is under both state and federal felony indictments and his well known very public admiration of both Putin and Kim of NKorea puts him closer to being a Marxist than any aging New Dealer.