Perpetrator of $20M Scheme Pleads Guilty

Thomas Hastert of Nevada City, Calif., pleaded guilty to 59 felony counts related to orchestrating a $20 million real estate scheme. According to California Attorney General Edmund G. Brown Jr., between September 2004 and September 2007, Hastert brokered more than 270 hard-money loans in Nevada, Sacramento, Sutter, Butte, Placer and Yolo Counties for real estate development projects. He secured $20 million from several investors, using the funds to broker hard-money loans to borrowers seeking to develop homes on real estate. He told investors that the borrowers had excellent credit scores and were capable of repaying the loans, when in fact many had poor credit scores, didn't make regular loan payments and held properties in foreclosure. Rather than place the loans he brokered into a special trust account overseen by a third-party escrow firm to ensure the project was being built, Hastert instead used the money to pay his office expenses and other development projects. Though he told investors he'd personally oversee the development of the land, investors once asked Hastert to drive them to a property supposedly under development and he was unable to find it. To keep concerned investors at bay, Hastert set up fake investors/straw men. If a legitimate investor tried to initiate foreclosure proceedings, he'd contend that the supposed majority owner opposed the action. He also took all his fees up-front as if the loans were fully funded, when in fact some loans never fully funded and others took more than a year to fully fund. Hastert will be sentenced on June 25 in Nevada County Superior Court.