Shawn Portmann, a former senior vice president and loan officer at Pierce Commercial Bank, pleaded guilty in federal court Tuesday to charges related to a mortgage fraud scheme that resulted in the collapse of the bank and a loss of $6.8 million in federal TARP funds.
Portmann pleaded guilty to conspiracy to make false statements in loan applications, making false statements to the Department of Housing and Urban Development and making a fasle statement in loan applications.
Under the terms of the plea agreement, both Portmann’s attorney and prosecutors will recommend a sentence between 10 years and 14 years in prison when he is sentenced on Jan. 28.
Portmann and three others were indicted in August 2011 for a mortgage fraud scheme that resulted in the collapse of Pierce Commercial Bank in November 2010.
"Community banks are a critical part of our financial system,” said U.S. Attorney Jenny A. Durkan. “Mr. Portmann lined his pockets with millions of dollars in commissions and bonuses, at the expense of the families who now find themselves under water on their mortgages. His fraudulent conduct led to the demise of Pierce Commercial Bank and significant losses for other financial institutions.”
According to the indictment, between 2004 and 2008, Portmann and the other defendants conspired to submit false documents within various loan documents and applications. They falsified information about the borrowers’ qualifications as well as their intention to reside in the homes being financed.
Based on a review of a sample of loans, prosecutors said, the co-conspirators caused more than 270 loans that contained false and fraudulent documents and information to be funded by Pierce Commercial Bank representing in excess $45 million in loan proceeds. More than 100 of these loan files have defaulted, causing in excess of $10 million in loss to Pierce Commercial Bank, secondary investors and HUD/FHA.
The indictment details multiple false statements included in loan documents regarding an applicant’s employment, income, and intention to reside in the property.
Pierce Commercial Bank received $6.8 million from Troubled Asset Relief Program (TARP) in January 2009. This money was never repaid.
Two other defendants in the scheme have already pleaded guilty – Jeanette Salsi, a former underwriter at Pierce Commercial Bank, and Adam Voelker, a former loan processer at the bank.This case was brought as part of efforts under way by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.