House in default for man in fraud probe

Less than a week after state agents raided the Loan Sense office of lawyer Thomas Hastert as part of real estate fraud investigation, a notice of default was issued for a Grass Valley house he owns.

Also, a hearing on the case has been scheduled tentatively for 1:30 p.m. today at the Nevada County courthouse, District Attorney Cliff Newell said Thursday.

Newell and a representative from the state Attorney General's office, Deputy Attorney General Mike Santoki of the special crimes unit, will be there. Hastert's lawyer, Craig Leri of Marysville, also is expected to attend and could oppose the taking of some of the documents as being protected by attorney-client privilege, Newell said.

Meanwhile, scores more people have stepped forward, alleging they were victimized by fraudulent loans, Grass Valley Police Capt. Dave Remillard said.

A public auction for the quaint yellow-and-white house with a picket fence at 10890 Rough and Ready Highway will take place on the steps of the county courthouse at 12:30 p.m. Oct. 30.

It is at least the second house in Hastert's name since August to default under a deed of trust. In August, a Morgan Ranch house was listed in the legal notices of The Union after Hastert couldn't make the mortgage payments.

But in a letter dated Sept. 25 and made available to The Union on Thursday, Hastert assured Loan Sense investors that their money was secure, and blamed police and state officials for problems in servicing the loans.

"I can assure each investor that their monies have been applied as represented by Loan Sense and are secured as represented in your disclosure documents," Hastert wrote.

Hastert said he could not service their loans because the Grass Valley Police Department had taken possession of the company computers and working files.

"The Department of Real Estate expresses no interest in seeing the loans serviced and is unwilling to make any effort to assist our borrowers or investors. Neither has the police department expressed any interest to me in protecting your interests," the letter said.

(The entire letter can be viewed at www.theunion.com; click on this story.)

On Sept. 21, state and local law enforcement officers raided the Loan Sense office on Brunswick Road and seized documents after numerous people, many of them elderly, complained they lost money through investments with Hastert, according to police.

Hastert's real estate license was suspended on Sept. 3, and the State Bar Association is running a parallel investigation, Newell and Remillard said.

Phone calls to Hastert on Thursday and last week were not returned.

Since the search warrant was served and the initial story ran in Saturday's edition of The Union, 40 new, previously unidentified victims have come forward with information about Loan Sense, Remillard said. About 30 people complained about Hastert prior to the search, he said.

Hastert's Loan Sense bank accounts are "frozen" until Monday by order of the court, Newell said. So far, no one else has been named in the investigation, but "we're looking at related people to that particular company," Newell said.

"It is a benefit to our case not to make an arrest at this time," Remillard added.

Because of the volume of calls, the police department has assigned a part-time officer to assist in the investigation, he said.

"There is a tremendous volume of documents," Newell added. Forensic auditors from the California Department of Justice are analyzing the financial records collected from Hastert's office.

Grass Valley police, the D.A.'s office, state officials, the FBI, the California Department of Real Estate and the California Bar Association have been investigating Hastert since January, according to information from Grass Valley police.

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To contact Staff Writer Laura Brown, e-mail laurab@the union.com or call 477-4231.