Ex-Orange Developer Gets 8-Year Term for Mortgage-Loan Scam

LOS ANGELES —  Former Orange developer Kent B. Rogers was sentenced Monday to eight years in prison and ordered to pay $70.7 million in restitution for his role in a massive mortgage-loan scam that has cost Bank of America about $118 million.

Federal prosecutors said the restitution equals the largest ever levied in a bank-fraud case, which was imposed in August against David A. Feldman of Palos Verdes, co-defendant of Rogers and the major figure in the complex scheme.

U.S. District Judge Dickran M. Tevrizian further ordered that a receiver be put in charge of Rogers’ assets to ensure the restitution, which is to be paid to San Francisco-based Bank of America.

Rogers pleaded guilty earlier this year to two counts of mail fraud for helping to sell more than $144 million in mortgage loans to 20 banks and savings and loan, almost all of which went into default despite assurances that they were completely safe.

Announcing the indictment of three men including Rogers last May, the U.S. attorney’s office said the scheme--whose principal outlet was National Mortgage Equity Corp. of Palos Verdes--was “one of the largest single frauds ever perpetrated on our nation’s banks and saving and loan associations.”

The indictment alleged that defendants conspired to coax lending institutions throughout the East and Midwest to buy into large pools of mortgages on Sun Belt property. They offered the institutions high-interest-bearing mortgages and assurances from underwriters that the borrowers could pay their debts. But the companies making those representations were linked through the defendants.

Rogers and the others were accused of using inflated appraisals, insider dealing and worthless guarantees to draw the institutions to invest in California real estate during 1982-1984. More than 97% of the mortgages defaulted.

The Bank of America was forced to reimburse institutions who lost money because it served as an escrow company and trustee for the bad mortgage pools.

Rogers, who was indicted with Feldman and George C. Ash of Alta Loma in May, 1989, controlled several companies involved in the scheme, including two Orange companies, WestPac and Nevada Western Pacific Financial. Rogers allegedly obtained millions of dollars in loans for providing a variety of fraudulent services, including furnishing inflated appraisals.

Assistant U.S. Atty. Leslie A. Swain claimed Monday in U.S. District Court in Los Angeles that Rogers had pocketed more than $44 million in loan proceeds, something his attorney vehemently denied.

“Where he spent that money we haven’t been able to trace,” Swain said. “Mr. Rogers is an incorrigible con man.”

Rogers, 51, was previously convicted on bankruptcy fraud charges in another case, and Swain said he had even falsified records pertaining to the time he spent doing community service, a condition of his probation.

“What you see is a history of Mr. Rogers thumbing his nose at the justice system,” said Swain.

Rogers, a former Huntington Beach resident now living in Riverside, appealed to Tevrizian for leniency. He said he was mostly guilty of poor judgment and should have removed himself from doing business with his two co-defendants, Feldman and Ash.

Tevrizian sentenced Feldman last August to 15 years in jail and ordered him to pay $70.7 million in restitution. Ash was sentenced to two years in jail.

“I am sorry that I didn’t disengage from that crowd earlier,” Rogers said. “I’m not real sure I understood the depth of what they were doing.”

Defense attorney Norman D. James challenged federal claims that Rogers pocketed tens of millions of dollars in the scheme, saying his client made less than $1 million.

“Everyone assumes it went in gold bars over to the Marshall Islands and that is not true,” said James. “Very little profit was made by Rogers, if any.”

Tevrizian ordered the restitution after an appeal from Bank of America, which asked the court to award damages under the federal Victim and Witness Protection Act of 1982.

James unsuccessfully appealed for a delay in deciding restitution, citing a number of civil suits against Rogers that also seek penalties.

“I don’t think they (Bank of America) need this court to act as a collection agent,” said James.

Rogers was ordered to report to Dec. 19 to begin his prison term. He will be eligible for parole in about three years.