Victims of former mortgage broker Thomas Hastert submitted more than $2 million in claimed losses at a restitution hearing that started Tuesday in Nevada City.

The former Loan Sense owner pleaded no contest last year to 63 counts of embezzlement and illegally selling real estate securities after brokering more than $20 million in 270 hard-money loans between 2004 and 2007.

Hastert used money from investors to give loans to people wanting to build homes, but victims said much of the money never went into legitimate loan accounts. Hastert also allegedly set up fake straw investors to lead original investors into thinking the loans they supposedly were funding were secure.

Only victims of 35 loans that were used in the charges to which Hastert pleaded no contest — about 45 people — were able to claim losses at the restitution hearing, which is expected to continue into next week.

It is falling to Nevada County Superior Court Judge Robert Tamietti to wade through the claims submitted in reference to those loans. No victims submitted losses on 11 of the 35 loans; on three loans, Hastert agreed to the submitted claims in the amount of $195,000.

The remaining claims have been made primarily by investors, and those total nearly $2.36 million.

One borrower, Nevada County resident Melissa Kaput, is listed as a claimant on several loans. She is claiming real estate losses on two properties that have gone into foreclosure, as well as other losses including out-of-pocket expenses.

Hastert's court-appointed attorney, Monica Lynch, argued that some of the claims should be denied because the investors' losses were not due to any action by her client, but rather were due to the downturn in the economy.

“On several loans, the victims are claiming losses when the only crime charged was embezzlement and the loan was reimbursed,” Lynch said. “There is no causal connection between the victims' loss and the embezzlement.”

But Tamietti noted there are relaxed causation standards for restitution hearings and ruled — for victim Robert Brewer — that Hastert's actions contributed to the foreclosure on a property, even though the loan had fully funded, and therefore Hastert was responsible for restitution.

Similarly, Tamietti found that Hastert's actions on a loan involving victim John Duncan directly led to a financial loss because a mistake in recording the title meant the investors could not foreclose on the property when the borrower defaulted on the loan.

The awards may end up meaning little to the victims in the case, however, since Hastert has claimed there is no money left.

“It's not really winning, really,” Brewer said. “It's (just) paper. It's a sad comment that this happened because of a lack of enforcement.”

In June 2009, county Superior Court Judge Sean Dowling rejected a plea agreement that would have given Hastert five years in state prison.

He entered a new plea based on a potential sentence of six to 15 years. At a debtors exam in October 2009, Hastert testified he no longer had any financial assets.

The restitution hearings resume at 9 a.m. Thursday.

To contact Staff Writer Liz Kellar, e-mail lkellar@theunion.com or call (530) 477-4229.