Former Orange developer Kent B. Rogers was sentenced Monday to eight years in jail 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 that the restitution, which is owed to San Francisco-based Bank of America, is paid.
Rogers, 51, 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 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 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 in 1982-1984. More than 97% of the mortgages defaulted.
Bank of America was forced to reimburse institutions who lost money because it served as an escrow 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, a charge 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 was previously convicted for bankruptcy fraud 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," Swain said.
Rogers, a former Huntington Beach resident now living in Riverside, appealed to Tevrizian for leniency, saying he was guilty mostly of poor judgment.