The apparent mastermind behind what prosecutors called the "largest mortgage fraud scheme in Alaska history" is going to prison.
Lance Lockard, 36, was sentenced to serve 70 months in federal prison and to pay $2.5 million in restitution for his role in defrauding mortgage lenders in a conspiracy that involved all elements of the Anchorage real estate industry: agents, buyers, sellers, appraisers, and mortgage and title companies.
"This could not have happened without the involvement of various professionals who sold their integrity for money," said U.S. Attorney Karen Loeffler.
By purchasing and then selling dozens of houses at inflated values -- with the help of a crooked appraiser -- 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.
The conspiracy occurred from 2003 to 2006, prosecutors said, when the real estate market was strong.
In all, eight people and a business were convicted on 101 counts of conspiracy, wire fraud, bank fraud and false statements to a financial institution. The business, Alaska State Mortgage Co., was fined $91,478 and no longer operates.
CONSPIRATORS
Here's how one of the schemes worked: Lockard, a licensed Anchorage real estate broker and investor, would buy a group of East Anchorage properties. He'd then enlist a "straw buyer" (such as his father-in-law) to buy the properties back from him on the same day at a higher price. The inflated price was justified to the mortgage companies by appraiser Charles Carlson, a conspirator.
The straw buyer would secure the loan, using a crooked title agent and falsified paperwork to avoid paying a down payment. He'd then give the money to Lockard.
Lockard would use the money to pay off his loan for originally purchasing the properties. He'd pocket the difference between the sales price and what he paid for it.
The conspirators would then turn around and sell the properties at an even higher price to an unsuspecting victim, with help from another inflated appraisal.
"There were real victims that ended up at the end thinking they had bought properties they could fix up and sell -- but the properties were worth way less than they had purchased them for," Loeffler said. "A lot of these went into foreclosure."
INFLATED VALUES
Assistant U.S. Attorney Kevin Feldis said the conspirators inflated the property prices from 27 percent up to 400 percent of their fair market value.
Carlson, the appraiser, was sentenced last month to two years in prison. Title agent Holli Stroud was sentenced in June to a year and a half in prison. Others sentenced in the case were two real estate agents, a loan originator and the two men who acted as the "straw buyers" for Lockard's scheme.
U.S. District Court Judge Ralph Beistline, who sentenced Lockard at the end of the day Friday, concluded that he fraudulently obtained more than $1 million from the First National Bank Alaska and that his crimes caused total losses of about $2.5 million. Beistline said Lockard will "face the consequences of the very poor choices he made."
The federal government seized $116,000 from an investment account that Lockard held, and his wages will be garnisheed after he gets out of prison. But it's questionable that he will ever be able to pay the full $2.5 million in restitution.
The FBI investigation and follow-up federal prosecution of the case lasted for three years.
Loeffler said the FBI uncovered the scheme in part because it became so extensive, and because "honest members of the industry started to see things that were inappropriate."
"They're very concerned, the real professionals out there, about their credibility and their integrity, and like anybody else you don't like to see your industry brought down by people like this," she said.
Find Sean Cockerham online at adn.com/contact/scockerham or call him at 257-4344.
Besides Lance Lockard, others convicted in the conspiracy and their sentences were:
• Charles Carlson, 74, a real estate appraiser from Anchorage. Sentenced in July to 24 months in prison and $2.36 million in restitution.
• Don Murray, 35, a real estate agent from Anchorage. Sentenced in May to 21 months and $493,869 in restitution.
• Holli Stroud, 30, a title company loan closer from Chugiak. Sentenced in June to 18 months and $403,744 in restitution.
• Keith Facer, 41, a real estate agent from Anchorage. Sentenced in May to 16 months and $221,065 in restitution.
• Jonathan Ruf, 33, a building and real estate investor from Anchorage. Sentenced in May to 12 months plus one day, plus $1.066 million in restitution.
• Cerise Sanders, 31, a loan originator from Anchorage. Sentenced in May to 12 months plus one day in prison.
• Gary Paterna, 62, Lockard's father-in-law, from Anchorage. Sentenced in May to three days in jail and $1.16 million in restitution.
• Alaska State Mortgage Co. Inc. of Anchorage. The company was sentenced in May to pay a $91,479 fine.
By SEAN COCKERHAM
scockerham@adn.com