TheBakersfieldCalifornian.com

Former Bakersfield real estate broker Carl Cole said Monday he was until recently blind to fraudulent activity inside his former company, Crisp, Cole & Associates.

Distracted by a large commercial-residential development the firm was proposing at Cal State Bakersfield, Cole said he was unaware the company was helping get loans for borrowers who should not have qualified for them.

Such activity was labeled mortgage fraud in a federal document brought to light Monday when one of the company’s former loan officers pleaded guilty to wire fraud in exchange for a promise to cooperate with prosecutors.

Cole, 62, said he only learned of fraudulent activity at the firm three months ago. Still owed more than $1 million by the company, Cole said he is a victim.

“I’m an old man and I was taken in,” he said. “I gave all my money and got nothing back.”

As the firm’s designated broker, however, he bears legal responsibility for Crisp & Cole’s loan-related activities. Moreover, similar statements by Cole fell flat last summer when state regulators pressed their case of mortgage fraud against Cole and Crisp in an administrative hearing.

Michael B. Rich, attorney for the state Department of Real Estate, called Cole an “abject failure” as supervising broker of Crisp & Cole and Tower Lending, the firm’s lending arm. Rich listed reams of transaction records, financial accounts and other formal paperwork Cole not only had access to but had the legal responsibility to check to make sure operations were functioning legally.

During the hearing, Rich also disputed claims by Cole and his attorney that most of the wrongdoing happened under a different broker’s watch by producing minutes of a board meeting showing Cole was in charge until October 2006. The department ultimately revoked Cole’s broker’s license.

Still, Cole said Monday he could not stop actions he knew nothing about. “I was a broker but I could not find out about things that were kept hidden from me,” he said.

At a July 2006 meeting not attended by his former business partner, David Crisp, 30, Cole said he asked company employees whether they were bending rules. Their general reaction, he said, was that of schoolchildren sitting in the principal’s office.

“I said, ‘If you’re doing anything wrong, stop it,’” he said.

Cole said he expects to be “exonerated ... to a great degree” by a civil lawsuit filed earlier this year by a former lender accusing Crisp, Cole and others of engaging in mortgage fraud.

— Californian staff writer Gretchen Wenner contributed to this report.