10-year-old fraud case against California lenders ends in hung jury
A 10-year-old fraud case against two San Luis Obispo County, Calif., lenders has ended in a hung jury.
After four weeks of testimony and three days of deliberations, the jury could not agree on whether Rodney Jarmin, 76, and Tammy Jordan, 54, former owners of Real Property Lenders, sold securities by means of false statements or omissions before they lost investors' money during the Great Recession in 2007.
Jarmin and Jordan were facing three similar counts; jurors split 11-1 in favor of not guilty on the first charge and 8-4 in favor of not guilty on the other two charges.
If convicted on all three charges, both could have faced a maximum of about eight years in County Jail.
They are due back in court Wednesday for a hearing on whether the District Attorney's Office plans to retry the case. Late Monday, Deputy District Attorney Eric Dobroth, who prosecuted the case, said it was too early to say.
Both defendants quickly left the courtroom after Superior Court Judge Jaquelyn Duffy announced the hung jury Monday. Jarmin's attorney, Robert Sanger, declined to comment since the case is still pending. Jordan's attorney, Pierre Blahnik, could not immediately be reached for comment.
Dobroth said outside the courtroom that he was pleased the trial ran efficiently and praised the jury’s hard work.
As the attorneys polled jurors outside the courtroom, one juror told them she doubted that another group of 12 jurors would be able to reach a unanimous verdict.
Jarmin got into the hard-money-lending business in 1990 and until 2007 had earned his investors healthy returns for real estate construction loans, according to court testimony. Jarmin and Jordan, who joined the company right before the housing market crash, acted as middlemen for investors whose money was then loaned to developers of residential projects.
Investors were promised annual 12% interest payments on their investments, and borrowers were provided loans more quickly than banks could. Real Property Lenders charged borrowers 1% to 2% of their loans for its fees.
So-called hard-money loans are considered high-risk, high-return investments.
It's unclear how much money all investors lost in 2007, but a listing presented by a prosecutor during closing statements totaled about $645,000 from nine people directly related to the charges.
The District Attorney's Office filed charges against the pair in 2011 following a recommendation by the state Department of Corporations. The DA's Office argued that Jarmin and Jordan purposely didn't disclose to investors that many of their homebuilder borrowers were defaulting on their loans.
Sanger and Blahnik, however, countered that their clients were straightforward with investors, requiring them to review disclosures and sign waivers before investing, and notifying them of media reports when the real estate market began to crash.
The trial began Oct. 24 and featured testimony from Jordan, the company's former legal counsel and about a dozen investors and borrowers.
To convict the two, the jury needed to find that Real Property Lenders omitted information to investors, that the information was material to investors’ decisions to invest and that the defendants knew they were omitting important information.
It was the second time the pair had gone to trial since 2011. Both were three days into jury selection in 2015 when they accepted — and later rejected — plea agreements offered by the San Luis Obispo County District Attorney's Office.
The plea deal with the then-prosecutor reduced the felony counts to misdemeanors, requiring no jail time and less than $115,000 in combined restitution. The DA's Office later claimed the deal was offered in error and prosecutors challenged the move. Under the state's Victim’s Bill of Rights — also known as Marsy's Law — victims in the case also should have been notified of any changes ahead of time.
The judge who accepted the deal agreed, and Jarmin and Jordan appealed. In February 2016, the state Appellate Court issued a decision saying that San Luis Obispo Superior Court should honor the deal. A second Superior Court judge agreed in March 2016.
However, another SLO Superior Court judge found that the two owed $363,000 to 14 people, more than the agreed-upon deal, so both Jarmin and Jordan took their case to trial a second time. Since that time, the amount of money investors lost and the number of investors affected changed.