Real Estate

Saturday, Apr 26 2014 09:14 PM

Questions on Crisp & Cole remain after Farmer verdict

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    By Henry A. Barrios / The Californian

    Julie Farmer arrives at the U.S. District Court in Fresno the morning of April 16 with her husband, Charles Farmer, and family members for her trial in the Crisp & Cole mortgage fraud case.

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    By Henry A. Barrios / The Californian

    David Crisp and his wife, Jennifer, walk up to the U.S. District Court in Fresno where they were sentenced March 31 for their roles in the Crisp & Cole mortgage fraud case.

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    By Felix Adamo /The Californian

    The last photograph of Carl Cole as a free man Feb. 24, arriving at Federal Court in Fresno where he would later be sentenced to 17 and a half years in prison and taken into custody in the Crisp & Cole mortgage fraud case.

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BY JOHN COX Californian staff writer jcox@bakersfield.com

A climactic chapter in Bakersfield's long-running Crisp & Cole saga may have closed with last week's verdict in the trial of Julie Dianne Farmer, but the larger mortgage fraud case is by no means resolved.

Still to come are sentencings for nine of the 15 remaining defendants, including Farmer, the former office manager found guilty Tuesday in U.S. District Court in Fresno of five of 12 counts against her.

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THE VERDICTS

On Tuesday, a federal jury of seven women and five men delivered a verdict in the case of United States of America v. Julie Dianne Farmer. Jurors found the defendant guilty on five counts -- and not guilty on seven counts -- related to her work as office manager, and later chief operations officer, at Bakersfield's now-defunct Crisp & Cole Real Estate.

Here's how the verdict broke down:

GUILTY:

* Conspiracy to commit mail fraud, wire fraud or bank fraud (guilty of all three).

* Mail fraud , relating to a $848,000 "first" loan for the January 2006 for purchase of a home at 39928 Yellow Lupin Lane in Shaver Lake.

* Mail fraud , relating to a $212,000 loan for purchase of the Shaver Lake property.

* Wire fraud , relating to a $844,071.54 wire transfer for purchase of the Shaver Lake property.

* Wire fraud , relating to a $210,454.92 wire transfer for purchase of the Shaver Lake property.

NOT GUILTY:

* Mail fraud , relating to the March 2006 purchase of a home at 2012 Redmire St.

* Mail fraud , relating to a $628,750 loan for purchase of the Redmire Street property.

* Mail fraud , relating to a $894,451 loan for the March 2006 purchase of a home at 11504 Haydock Court.

* Mail fraud , relating to a $223,613 loan for purchase of the Haydock Court property.

* Wire fraud , relating to a $891,832.34 wire transfer for purchase of the Haydock Court property.

* Wire fraud , relating to a $222,428.40 wire transfer for purchase of the Haydock Court property.

* Conspiracy to launder money .

OTHER UPCOMING CRISP & COLE SENTENCINGS

Several of the Crisp & Cole Real Estate mortgage fraud conspirators are due to be sentenced before Julie Farmer's July 14 sentencing. Here's the rundown:

 

MAY 5

Michael Angelo Munoz: former sales agent

Charged with: five counts of mail fraud; two counts of bank fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty to two counts of mail fraud.

 

MAY 12

Jeriel Salinas: former sales agent

Charged with: five counts of mail fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty in November to one count of conspiracy to commit mail, wire and bank fraud.

 

MAY 27

Kevin Patrick Sluga: father-in-law of David Crisp, father of Jennifer Crisp; former accountant for Crisp & Cole who has since lost his CPA license, admitted in the plea he created CPA letters containing false employment and income information to help straw buyers get loans

Pleaded guilty to four counts of wire fraud in January 2010.

 

Leslie Sluga: Kevin Sluga's wife, Jennifer Crisp's mother

Pleaded guilty to two counts of wire fraud in January 2010.

 

JUNE 2

Megan Balod: sister-in-law of David Crisp, sister of Jennifer Crisp

Pleaded guilty to four counts of wire fraud in January 2010.

 

Christopher Lance Stovall: former loan officer with Tower Lending, mortgage brokerage firm of Crisp & Cole Real Estate

Pleaded guilty to four counts of mail fraud in July 2010.

 

Jerald Allen Teixeira: former loan officer at Tower Lending

Pleaded guilty to wire fraud in September 2009.

 

JUNE 9

Sneha Ramesh Mohammadi: former chief financial officer; also served as office manager at Tower Lending.

Charged with: seven counts of mail fraud; four counts of wire fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money; one count of bank fraud.

Pleaded guilty in November to one count of conspiracy to commit mail fraud, wire fraud and bank fraud.

 

ALREADY SENTENCED

David Marshall Crisp: former chief executive, held a real estate sales license

Charged with: 33 counts of mail fraud; 11 counts of bank fraud; 10 counts of wire fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty to one count of conspiracy to commit mail fraud, wire fraud and bank fraud. Sentenced in March to 17 1/2 years in prison. Being held at Federal Correctional Institution, Lompoc. Release date: June 12, 2029.

 

Carlyle "Carl" Lee Cole: former managing broker and secretary of Crisp & Cole Real Estate, the familiar name for the Crisp, Cole & Associates corporation

Charged with: 33 counts of mail fraud; 11 counts of bank fraud; 10 counts of wire fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty in November to a felony charge of conspiracy to commit mail, wire and bank fraud. Sentenced in February to 17 1/2 years in prison. Being held at Federal Correctional Institution, Lompoc. Release date: May 29, 2029.

 

Caleb Lee Cole: Carl Cole's son

Charged with: two counts of mail fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud.

Pleaded guilty in November to mail fraud. Sentenced in February to six months in prison. Being held at United States Penitentiary, Atwater in Merced County. Release date: Sept. 18, 2014.

 

Jayson Peter Costa: worked as a loan officer for Tower Lending while an unlicensed salesman

Charged with: two counts of mail fraud; two counts of bank fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty in November to one count of conspiracy to commit mail fraud, wire fraud and bank fraud. Sentenced in March to 6 1/2 years in prison. Location unclear.

 

Jennifer Anne Crisp: David Crisp's wife

Charged with: five counts of mail fraud; two counts of wire fraud; two counts of bank fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty to one count each of mail fraud and wire fraud. Sentenced in March to five years probation.

 

Robinson Dinh Nguyen: former sales agent

Charged with: three counts of mail fraud; two counts of bank fraud; one count of conspiracy to commit mail fraud, wire fraud and bank fraud; one count of conspiracy to launder money.

Pleaded guilty in 2011 to one count of conspiring to commit mail, wire and bank fraud. Sentenced in January 2012 to 27 months in prison, followed by three years supervised release and ordered to pay $433,000 in restitution.

He was released from custody Aug. 27, 2013.

 

Note: The maximum penalty for conspiracy to commit mail fraud, wire fraud and bank fraud is 30 years in prison and a $1 million fine. The maximum penalty for one count of mail or wire fraud is 20 years in prison and a $250,000 fine.

The court, however, will determine actual sentences.

 

Source: Californian archives, U.S. District Court records, U.S. Attorneys' Office, U.S. Bureau of Prisons

But even those decisions, scheduled to be dealt with by Judge Lawrence J. O'Neill by mid-July, go only so far in putting to rest a case that shook Bakersfield's real estate industry and which federal prosecutors say cost lenders about $30 million.

Some questions were never fully answered publicly, such as why Farmer took the stand in her own defense, why it took a federal investigation to uncover what many locals were aware of and what it will take to keep such extensive fraud from happening again.

TRIAL'S LOOSE ENDS

In Farmer's case, prosecutors alleged she helped run a mortgage fraud ring in which conspirators at Crisp & Cole Real Estate used straw buyers to secure home loans fraudulently, then flipped the properties multiple times at ever-higher prices to extract the equity. But Farmer denied knowing about the fraud, let alone being part of it.

Her decision to testify at her own trial was viewed by Bakersfield criminal defense attorneys as a questionable tactic -- especially after she briefly broke into sobs under tough cross-examination.

Lawyer H.A. Sala said jurors tend to scrutinize a defendant's testimony, and especially her demeanor on the stand, more than they do other witnesses. In cases where the defense has no other choice, though, the defendant must undergo hours, if not days, of practice with an attorney answering harsh, leading questions.

Sala added that Farmer's brief breakdown did her no favors, especially because it was followed by her statement she did not "know how to answer" the prosecutor's repeated question about why she ordered a bank deposit verification after depositing $22,000 into the account of one of many of Crisp & Cole's straw buyers.

"If it was a gotcha moment, that's the ball game," he said.

Farmer's Bakersfield attorney, Scott Howry, said this was one of those cases where it actually was in the defendant's best interest to testify.

"I think she had to go on the stand," he said. "The case was always about credibility."

Howry also addressed the issue of what kind of sentence his client may face when court reconvenes July 14.

He said it may never come to that because four of the five "guilty" counts against her dealt specifically with Farmer's 2006 purchase of a home in Shaver Lake. Howry said he and Fresno attorney Tony Capozzi have moved to strike all the guilty counts based on a lack of evidence.

Even if Judge Lawrence J. O'Neill disagrees, Howry said, any sentence should be light given that lenders lost no money on the Shaver Lake transaction.

"All the sentencing is based on the amount of the loss," he said.

Still, it was unclear how big a role the Shaver Lake transaction played in the jury's guilty verdict on one count of conspiracy to commit mail fraud, wire fraud or bank fraud. That crime carries a maximum penalty of 30 years in prison and a $1 million fine.

That was also the only crime to which Farmer's bosses -- business owners David Crisp and Carl Cole -- pleaded guilty before they were each sentenced earlier this year to 17 1/2 years in prison.

Bakersfield defense attorney Michael Lukehart said the judge could come down hard on Farmer simply because she demanded a jury trial instead of accepting a plea deal.

But, he said, "It would be sad if someone got slammed for exercising their constitutional right to trial."

Sala added that Farmer's defense attorneys will likely tell the judge before he sentences her that she played only "a relatively minor role in the effectuation of this offense and its consequences." That could play well with O'Neill, he said.

Another issue from Farmer's trial, and for which there is still no answer, is whether she will face perjury charges.

A spokeswoman for the U.S. Attorneys' Office said prosecutors threatened to bring such charges against Farmer as a way of persuading the judge to have her taken into custody after the verdict was announced.

The question arose because Farmer said in court she had consulted two people, including a lawyer, about whether it was appropriate to give 99 percent of the proceeds from her sale of the Shaver Lake property to a business entity controlled by Crisp and Cole.

While the judge declined to have Farmer remanded to custody pending her sentencing, he did give the defense until Friday to either name the lawyer who provided advice about the transaction or assert her Fifth Amendment right not to incriminate herself.

Howry said he could not say which way the defense would go on that point.

LOOKING BACK

After Farmer's trial, several observers of the Crisp & Cole case since the mid-2000s put the overall mortgage fraud scheme into perspective.

They said it was a different time back then: Banks used much looser lending standards than they do now, and local law enforcement agencies had only a tenuous grasp on mortgage fraud.

As a result of the case, Bakersfield now has a committee composed of industry representatives, the Kern County District Attorney's Office, and police and sheriff's departments. The group's primary purpose is to review any hint of potential mortgage fraud.

Because of that group's existence, "I think we would probably have a better shot of mitigating something like (the Crisp & Cole case) in the future," said committee member Scott Tobias, a Bakersfield real estate broker and owner of Prudential Tobias Realtors.

Tobias said he and others in the industry knew "some shady stuff" was going on at Crisp & Cole -- "but what do you do about it?"

One of the case's first whistle-blowers, local real estate appraiser Gary Crabtree, is still asking questions about how the case was pursued.

He criticized what he saw as sluggish action on the part of law enforcement he first alerted to the fraud in 2006.

"When you look back at the case, why did it take 7 1/2 years?" he asked. "I mean, that's a question that needs to be answered, because the strategy of the Department of Justice and FBI on mortgage fraud was to select the most egregious fraud cases from across the country and prosecute them vigorously in a timely manner."

That strategy was supposed to send a message to the real estate industry, he asserted.

"If that was the goal, it failed miserably," he said.

He further accused former Kern County District Attorney Ed Jagels of ignoring the mortgage fraud when Crabtree presented him with accusations against Crisp & Cole in 2006.

Jagels told him he "did not see any victims here and this was a civil matter, not a criminal matter," Crabtree said in an interview Friday. He added that the former district attorney explained he had a close personal friend among Crabtree's list of alleged culprits.

But Jagels on Friday sharply disputed Crabtree's account of their conversation, saying he never called it a victimless crime or said it was a civil rather than a criminal matter.

Jagels did acknowledge disclosing to Crabtree that he had a friend involved in the case, though he declined to identify the person and said the person was never implicated.

The main reason he chose not to open an investigation, Jagels said, is that Crabtree told him the FBI had already opened an inquiry.

"I explained at great length to Mr. Crabtree that the DA's office was a prosecutorial, not an investigative, agency," he said.

Jagels added that although the office sometimes conducts its own investigations, "I certainly did not intend to replicate" work already being done by the FBI.

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