Rogers Denies Fraud Charges in B of A Case

Orange County developer Kent B. Rogers, named in several lawsuits as a central figure in the alleged mortgage securities fraud that cost Bank of America $95 million, professed his innocence Thursday and said the bank itself was responsible for its problems.

Rogers, who was released from the federal prison at Lompoc last week after serving 4 1/2 months on an unrelated bankruptcy fraud conviction, said he was being made a scapegoat for the bank scandal because of his felony conviction and adverse publicity surrounding his earlier business dealings.

“B of A decided I was going to be the patsy. They decided to shove their problems under the rug and blame me,” he said. A Bank of America spokesman responded: “Anyone with any familiarity with the situation knows that’s not the case.”

Rogers, 46, spoke for more than two hours Thursday about the complex transactions involving his company and a number of others that Bank of America said ultimately led it to take an embarrassing $95-million charge against fourth-quarter earnings last year.

His comments to The Times were his first public statements since he entered prison in February and his first response to charges in lawsuits filed against him by Bank of America and National Mortgage Equity Corp., the Palos Verdes Estates firm headed by David A. Feldman that packaged the mortgage securities.

The NMEC suit alleged that Rogers and his associates induced the mortgage firm to invest millions of dollars in an elaborate pyramid scheme based on overvalued real estate in California and Texas. Rogers categorically denied the allegation.

Bank of America claimed that Rogers, Feldman and others defrauded it by putting together pools of mortgage loans based on grossly inflated appraisals, non-existent loans, multiple loans on single pieces of property and worthless insurance guarantees.

The bank served as trustee and escrow agent for the pools, which attracted $133 million in investment funds from 20 smaller banks and savings and loans. When the pools turned out to be based on properties worth no more than $38 million by the bank’s accounting, B of A repaid the investor institutions and took the $95-million loss.

The bank has since fired five employees who handled the transactions and accepted the resignations of two senior executives who it said had failed to exercise proper oversight.

Rogers said Bank of America’s problems have nothing to do with him or his company, West Pac.

“Some day they’re going to wake up to the fact that we weren’t involved,” he said. But he added that he expects that his legal defense will probably break him financially and that it may take him as long as two years to clear his name.

The B of A spokesman said the bank’s view of Rogers’ role in the affair is contained in its $385-million fraud and racketeering suit against Rogers, Feldman and others.

Rogers denied that he and Feldman were partners or conspirators, as charged in the B of A lawsuit and in two others filed by Texas and Delaware authorities in connection with the insolvency of an insurance firm that Rogers allegedly controlled. If they ever were partners, today Rogers and Feldman are trading broad allegations of blame.

Feldman, NMEC’s president, referred all questions to his attorney, Charles Wehner of Beverly Hills, who did not return phone calls Thursday.

Feldman also is a convicted felon, having recently served 12 months of an 18-month sentence on a federal felony conviction in connection with a scheme to defraud a major brokerage house by using phony bank guarantee letters to meet collateral requirements for stock options trading.

Rogers predicted that the cases against him would either be dropped or dismissed before coming to trial.