Fourteen months after their indictment, seven people and one Anchorage mortgage company have agreed to plead guilty to federal conspiracy and fraud charges after taking more than $1 million in profits from illegal home loans.
Federal prosecutors say the conspiracy allegedly lasted between 2003 and 2006 and involved all elements of the Anchorage real estate industry: agents, buyers, sellers, appraisers, agents and mortgage and title companies.
By purchasing and then selling dozens of houses at inflated values -- using bogus checks and bloated appraisals, for example -- the alleged conspirators created at least 20 foreclosures and defrauded 13 banks and mortgage companies of roughly $1.7 million, according to prosecutors and the grand jury indictment handed up in December 2007.
U.S. Attorney Nelson Cohen called the case, investigated by the FBI, the biggest loan fraud scheme ever prosecuted in Alaska.
The case had been set for trial next week. But because of the plea agreements signed by most of the defendants over the past few weeks, a trial may never materialize.
NO TRIAL?
A week ago, the lead defendant in the case, Lance Lockard, a real estate agent and investor, agreed to plead guilty. Accused of orchestrating the illegal home loans, he spent roughly a year in federal custody before being released on bail in December.
In recent weeks, six other conspirators also signed plea agreements, though one of them -- Charles Carlson, an appraiser -- changed his mind on Friday in the middle of a federal court hearing in Anchorage, reversing his plea back to not guilty.
Also last week, prosecutors dropped all charges against Susan McCready, the chief executive of Alaska State Mortgage, the firm that processed the fraudulent loans. Her attorney, Phillip Weidner, said she was not involved in the conspiracy.
In their plea deals with the defendants, prosecutors said they would dismiss numerous other charges; however, at least six defendants still face the possibility of decades in prison and fines up to $1 million. Sentence hearings are scheduled for April and May.
At this point, only Carlson will go to trial, said assistant U.S. Attorney Crandon Randell. His trial is scheduled to begin later this month.
THE ACCUSED
The defendants agreed to plead guilty to dozens of criminal charges involving more than 50 real estate deals between 2003 and 2006.
The defendants accused of bank fraud will face the biggest penalties: a possible maximum sentence of 30 years in prison and a $1 million fine.
Here's what they agreed to:
• Lance Lockard, an Anchorage real estate broker and real estate investor, agreed to plead guilty to 12 counts including conspiracy, bank fraud and false statements.
• Holli Stroud, an escrow agent who allegedly filed bogus paperwork while working at Land Title, Alyeska Title and Stewart Title agencies, agreed to plead guilty to seven counts including conspiracy and bank fraud.
• Gary Paterna, a real estate investor and Lockard's father-in-law, agreed to plead guilty to five counts including conspiracy and bank fraud.
• Cerise Sanders, a former loan officer at Alaska State Mortgage, agreed to plead guilty to three counts including conspiracy and bank fraud.
• Keith Facer, a real estate agent and investor, agreed to plead guilty to three counts including conspiracy and wire fraud. Don Murray, another real estate agent, agreed to plead guilty to four counts, also including conspiracy and wire fraud.
• Alaska State Mortgage agreed to be placed on three years' probation and agreed to pay a $91,478 criminal fine, with $50,000 due at sentencing.
• Carlson, the real estate appraiser, originally agreed to plead guilty to eight counts including conspiracy and bank fraud, but he changed his plea to not guilty on Friday.
• Jonathan Ruf, a local builder and real estate investor, agreed to plead guilty to four counts including conspiracy and bank fraud.
THE AFTERMATH
The Lockard case was the second major mortgage fraud case prosecuted in Anchorage in the past two years involving a conspiracy. A prior case involved a seven-member fraud ring and it resulted in several jail sentences for Anchorage residents, including a former loan officer at Countrywide Home Loans.
Just a few months ago, state regulators assessed their largest-ever fine against a title agency. Alyeska Title had to pay a $400,000 fine for significant paperwork errors, plus $165,000 in restitution for a customer who got a worthless insurance policy.
Art Clark, president of the Alaska Association of Realtors, said it would be nice to believe that all of the bad apples have been weeded out of the local industry, but he can't be certain.
"I'm not sure the FBI is done yet," he said.
FBI officials did not return phone calls last week on the matter. The agency has investigated similar fraud schemes in the Lower 48, some of which resulted in mass foreclosures.
"I hope these people can get on with their lives and that the real estate community can learn from this," Clark said.
Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.
By ELIZABETH BLUEMINK
ebluemink@adn.com