Crisp & Cole: Lender Lawsuit Alleges Widespread Fraud

From bakersfield.com:
A new lawsuit against Crisp, Cole & Associates alleges widespread fraud among appraisers, accountants, a homebuilder and others who worked with — or allegedly worked with — the defunct Bakersfield real estate company.
The suit, filed Jan. 8 by a now-bankrupt subprime lender, names more than 15 people as defendants and seeks more than $4.2 million in damages from failed loans originated by Crisp & Cole’s mortgage brokering unit.
Those reached by phone Tuesday and Wednesday, including David Crisp, denied wrongdoing.
Some allegations cover territory already visited in disciplinary actions from state regulators.
But the case outlines for the first time how people from different trades allegedly schemed together to draw up bogus loan papers and milk them for cash.
It also gives a taste of what might be on the table if federal officials ever file a criminal indictment. FBI and IRS agents raided 13 local Crisp & Cole-related sites in fall 2007 but have not yet filed charges.
SEVEN LOANS
The suit from the former Fremont Investment & Loan — now Fremont Reorganization Corp. — says fake employment information and fudged appraisals were submitted with seven loan applications it funded in 2005 and 2006.
In one example, Crisp’s wife, Jennifer Crisp, claimed to make $25,500 a month as a self-employed consultant.
The house, at 8702 Oak Hills Ave., was appraised at $660,000. Jennifer Crisp was loaned the full sale amount, $659,340.
Fremont claims “all documentation ... including the CPA letter, was falsified” and the appraiser “assisted” the scheme “by falsely stating the value” of the home.
What’s more, the transaction wasn’t a “true sale” but was staged to benefit the builder and Crisp & Cole.
Similar allegations — that the sales pumped cash into Crisp & Cole coffers — were made regarding the six other loans.
Defendants have not yet been served with the suit.
REBUTTALS
David Crisp, whose real estate sales license was revoked by regulators last fall, said Wednesday he is “just trying to get my life back together.”
“I’m trying to pick up the pieces to pay everybody back,” Crisp said, “but I can’t do that when the newspaper keeps blasting me.”
Cole, whose broker’s license was also revoked but who is challenging the revocation in court, did not return a message seeking comment.
The homebuilder, John Balfanz of John Balfanz Homes Inc., said he’s done nothing wrong.
“There is nothing fishy on my end,” Balfanz said.
The appraiser on the Oak Hills property, James Rudick, did not return a message seeking comment. Rudick is named once. Another appraiser named once, Gary Killian, did not return a call.
Five of the contested appraisals were done by San Joaquin Appraisals Inc.
San Joaquin’s owner, Kirksey J. “Mark” Newton Jr., who is named as a defendant, also has a pending accusation from state regulators seeking to revoke or suspend his license. Newton is fighting the charges.
San Joaquin’s offices were among the Crisp-related sites raided by the FBI in September 2007.
Newton did not return a message seeking comment.
The accountant who allegedly penned the employment verification letter, Timothy Hubbell, declined to comment.
Hubbell testified during Cole and Crisp’s license hearings that his former business partner, Kevin Sluga — Jennifer Crisp’s father and Crisp & Cole’s CPA — had admitted to creating forged letters bearing Hubbell’s name.
Sluga’s home was among sites raided by federal agents.
Fremont names Sluga and his company as defendants in multiple transactions. Sluga did not return calls seeking comment, nor did his attorney.
Two other people named in the case as CPAs who submitted employment-verification letters don’t have CPA licenses, state records show.
Haysar Lopez of H & E Lopez Income Tax Service in Bakersfield said she wasn’t familiar with the transaction in question and has never written such documents. The other, Hilda Gonzalez, could not be located.
The suit also names former Crisp & Cole employees and associates Jayson Costa, Justin Eddleman, Robinson D. Nguyen, Lynnmai Nguyen, Christopher Stovall, Jerald Teixeira and David Bruce Whisler. None could be reached for comment.
An ongoing Californian tally counts at least 126 properties, most single-family homes in metro Bakersfield, tied to bad loans totaling more than $84.5 million. Of those, 110 have been foreclosed on.