Conspiracy Charges Denied in B of A Case : West Pac Owner Says Firm Not Part of Scheme

Kent Rogers, owner of West Pac Corp. of Orange County, said Wednesday that his firm had only an “arm’s length” relationship with the Palos Verdes Estates company that was Bank of America’s servicing agent on more than $20 million in mortgages on several condominiums in Houston.

Texas insurance authorities have alleged in court that West Pac and National Mortgage Equity Corp. of Palos Verdes Estates were part of a conspiracy to sell mortgage-backed securities based on fraudulent loan transactions and inflated appraisals.

Bank of America, which says it “exercised oversight” for the Eastern savings firms that bought the securities, disclosed last week that it took a $37-million pretax operational loss to settle the claims of these institutional investors.

The Texas suit, filed Jan. 7 in state court in Austin, names among the defendants Rogers, who is appealing a six-month federal prison sentence in an unrelated matter, and David Feldman, former president of National Mortgage. Feldman himself has been serving a prison term on a 1982 fraud conviction in Illinois.

The suit also named a Bank of America employee, Mary Brown, as a defendant. It alleged that she arranged to have the bank act as trustee on the pooled loans, although she was “aware that the property values . . . had been inflated.”

‘Totally False’

Brown could not be reached for comment.

In an interview Wednesday, Rogers, 46, asserted that it was “totally false” that he and Feldman had been partners or business associates.

“I’ve only seen that guy a couple of times,” Rogers said.

He said George Ash, who succeeded Feldman as president of National Mortgage, “handled all transactions involving my company and the Bank of America.” He said that Ash had “worked for one of our subsidiaries for some time.”

Ash, in a brief interview, declined to discuss details of the loan problems, which are under investigation by the FBI.

Asked how he came to be listed in Nevada records as secretary-treasurer of Consolidated Equities Corp., another Palos Verdes firm headed by Feldman, Rogers replied:

“He must have formed a corporation and listed me on it. I’ve never seen it (the papers) to this day.”

In defending his actions in the Houston matters, Rogers also said National Mortgage executed documents that relieved West Pac of any liability on the mortgages. Rogers said he has not seen the Texas lawsuit and could not comment fully on it.

Rogers also took issue with allegations by Delaware insurance regulators that he acquired and used Pacific American Insurance Corp. of Wilmington as part of a “fraudulent” plan to enrich himself. The company, which the Delaware regulators declared insolvent and took over last September, issued security bonds on the mortgage-backed securities.

Rogers said his group had lent about $4 million to the insurance firm before refusing to put more capital into it. He said he has a cross-complaint against the Delaware insurance department in the case.

Rogers said that, as far as he knows, Pacific American had issued security bonds on only about $20 million of mortgage-backed securities. He said he does not know how Delaware authorities estimated a total of $100 million to $200 million.

He said Catherine Mulholland, a deputy attorney general in Delaware who made the estimate, is “running off at the mouth.”

Asked why the Texas and Delaware agencies have made their accusations against him, Rogers said:

“I think they’re trying to cover (themselves) for something they’ve done in the past.”

Asked about his criminal conviction, Rogers said: “We’ve appealed. The government withheld a substantial amount of evidence from the original trial.”

According to public records in the case, Rogers has made various appeals to the U.S. 9th Circuit Court of Appeals since his conviction in a February, 1982, trial on charges of bankruptcy fraud. He was accused of hiding ownership of the 2,769-acre Whiting Ranch, north of El Toro in Orange County, during bankruptcy proceedings involving his Tustin-based Global Western Development Corp.

He was sentenced to six months in prison, a $10,000 fine and five years’ probation.