Three former employees of now defunct Pierce Commercial Bank were sentenced to prison for their roles in a mortgage fraud scheme that contributed to the collapse of the financial institution.
According to the U.S. attorney’s office, the three conspirators repeatedly created fraudulent documents in loan files and provided false information to make the loans appear legitimate. Some of the employees were veterans of the mortgage industry and followed their conspiracy leader—Shawn Portmann—to PC Bank Home Loans, a subsidiary of Pierce Commercial Bank, when he offered them higher salaries.
From 2004 to 2008, Portmann and his conspirators closed almost $1 billion in loans, earning over $1.7 million per year. The attorney’s office found that over 300 conventional and FHA loans were closed with false information. More than half of these loans defaulted or caused loss to Pierce Commercial Bank, secondary investors, and/or the Federal Housing Administration.
The Department of Justice said losses resulted from this scam was approximately $10 million.
Jill Reding, a loan processor, was sentenced to six months in prison and three years of supervised release. Reding worked in the mortgage industry for six years. She joined Portmann at PC Bank Home Loans after he provided her with a salary raise of $2,400 a month.
Loan processor Tonya Ruf has to serve a seven month prison terms as well as three years of supervised release after the sentencing is completed. Ruf approved loans that were originated by Portmann even though she knew they were filled with fraudulent documents and inaccurate statements.
Katherine Friske also decided to unite with Portmann at PC Bank Home Loans when he offered $800 more a month than her previous employer. During the two years at PC Bank, Friske submitted dozens of fraudulent loan applications that contained false verifications of employment, false lease agreements, and imprecise assertions of owner-occupancy. Friske was sentenced to four months in prison and three years of supervised release.
Portmann and five other conspirators are scheduled for sentencing in January 2013.
“The conspiracy that brought down Pierce Commercial Bank required participants at every level to abandon their ethics and their moral compass and repeatedly engage in fraud,” said U.S. attorney Jenny Durkan. “These defendants, instead of creating fraudulent documents and processing false loan files, had an obligation to blow the whistle on Shawn Portmann—instead, they chose to continue the wrongdoing, which hurt many families and destroyed the bank.”