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The California Department of Justice has taken the lead in investigating a Grass Valley loan company that allegedly defrauded dozens of investors and borrowers of more than $2 million.
The investigation of mass fraud at Ponderosa Home Loans began when a company official turned over 25 documents pointing to possible criminal activity, Deputy District Attorney Jim Phillips said.
Phillips said the official indicated he could not make any more payments on the loans and that the loans would soon begin to default. The Ponderosa official believed the alleged victims would find out one way or another, Phillips said.
Phillips declined to identify the official but described Ponderosa as a "one-man operation."
According to the California Department of Real Estate Web site, the broker associated with the business is Keith Monroe Hysom of Grass Valley. Ponderosa Home Loans was located at 12059 Nevada City Highway, Suite 105, but it is currently closed
Hysom did not return several calls from The Union. According to the real estate Web site, he was licensed as a broker in 1985, and the license does not expire until June 2005.
About three weeks ago, the Ponderosa official and his attorney met with two financial investigators from the Department of Justice, Phillips, a deputy attorney general, and Nevada County Sheriff's Detective Guy Selleck, Phillips said.
Since that meeting, Selleck said, control of the firm has been handed over to another man, Scott Stober. Stober did not return a call from The Union Tuesday.
After looking over the documents, Phillips said, he noticed "possible evidence of fraudulent loans."
"There are victims all over California," he said. "Maybe even outside. Some are deceased."
He was quick to point out, however, that no crime has been verified yet.
Phillips and Selleck said some of the questionable loans are 5 years old but that Ponderosa Home Loans had been in business for about 25 years, and the alleged fraud might go back farther than that.
The detective said he is aware of about 25 investors and about 15 borrowers who allegedly lost money through their dealings with Ponderosa. The victims turned over amounts ranging from $40,000 to $425,000, Phillips said.
The alleged schemes involved fake first deeds of trust, which involve three parties - the lender, a trustee and a borrower - and replace a conventional first mortgage. The trustee typically holds title to the property until the loan is paid.
Selleck said he will be trying to find other Ponderosa investors and then borrowers, and the district attorney said that more victims have to be found before the case can be filed.
"It's possible there are people out there who don't even know they have been ripped off," Phillips said. "The investigation is not going to move quickly."
Since 1989, Ponderosa Home Loans has been sued 10 times, most recently in 2000, according to Nevada County court records. All of the cases were dismissed. Selleck said the sheriff's department has never investigated the firm for criminal activity before.
Now, the Department of Justice will be auditing the company, he said.
"They will be following the money backwards," Selleck said.
The investigation of mass fraud at Ponderosa Home Loans began when a company official turned over 25 documents pointing to possible criminal activity, Deputy District Attorney Jim Phillips said.
Phillips said the official indicated he could not make any more payments on the loans and that the loans would soon begin to default. The Ponderosa official believed the alleged victims would find out one way or another, Phillips said.
Phillips declined to identify the official but described Ponderosa as a "one-man operation."
According to the California Department of Real Estate Web site, the broker associated with the business is Keith Monroe Hysom of Grass Valley. Ponderosa Home Loans was located at 12059 Nevada City Highway, Suite 105, but it is currently closed
Hysom did not return several calls from The Union. According to the real estate Web site, he was licensed as a broker in 1985, and the license does not expire until June 2005.
About three weeks ago, the Ponderosa official and his attorney met with two financial investigators from the Department of Justice, Phillips, a deputy attorney general, and Nevada County Sheriff's Detective Guy Selleck, Phillips said.
Since that meeting, Selleck said, control of the firm has been handed over to another man, Scott Stober. Stober did not return a call from The Union Tuesday.
After looking over the documents, Phillips said, he noticed "possible evidence of fraudulent loans."
"There are victims all over California," he said. "Maybe even outside. Some are deceased."
He was quick to point out, however, that no crime has been verified yet.
Phillips and Selleck said some of the questionable loans are 5 years old but that Ponderosa Home Loans had been in business for about 25 years, and the alleged fraud might go back farther than that.
The detective said he is aware of about 25 investors and about 15 borrowers who allegedly lost money through their dealings with Ponderosa. The victims turned over amounts ranging from $40,000 to $425,000, Phillips said.
The alleged schemes involved fake first deeds of trust, which involve three parties - the lender, a trustee and a borrower - and replace a conventional first mortgage. The trustee typically holds title to the property until the loan is paid.
Selleck said he will be trying to find other Ponderosa investors and then borrowers, and the district attorney said that more victims have to be found before the case can be filed.
"It's possible there are people out there who don't even know they have been ripped off," Phillips said. "The investigation is not going to move quickly."
Since 1989, Ponderosa Home Loans has been sued 10 times, most recently in 2000, according to Nevada County court records. All of the cases were dismissed. Selleck said the sheriff's department has never investigated the firm for criminal activity before.
Now, the Department of Justice will be auditing the company, he said.
"They will be following the money backwards," Selleck said.
