Prosecution seen as likely in Hastert loan fraud probe
August 18, 2008
Almost a year after police seized documents from attorney Thomas Hastert’s Grass Valley mortgage company Loan Sense, three state agencies continue to investigate allegations of real estate fraud and other criminal activity.
Criminal investigators from the state Department of Justice continue to question a number of people in Nevada County as part of their investigation, while the state bar and department of real estate lead similar inquiries.
Grass Valley police and state investigators believe more than a hundred people, many of them elderly, could be victims of real estate fraud connected to Hastert’s business dealings that led to last September’s seizure.
No time line has been set for wrapping up the case but one state investigator suggested that criminal prosecution is likely.
“We wouldn’t put all this effort forth if we didn’t think so,” the investigator, who asked not to be named, said Monday.
Hastert could not be reached for comment, but he previously has declared his innocence in the matter.
A status conference regarding Hastert’s law license will be held in a state bar court in San Francisco at 9:30 a.m. on Aug. 25.
Meanwhile, patience is running thin for Hastert’s former clients. Since January, several civil suits have been filed, and a number of homes have gone into foreclosure, said county District Attorney Cliff Newell.
Since December of last year, around 20 properties with original loans from Loan Sense have gone into foreclosure through Placer Foreclosure, said owner Ron Robbins.
“For the most part, a majority of those loans were created in violation of California’s civil code,” Robbins alleged.
As an attorney, Hastert has helped elderly individuals plan their estates, he said. They also came to him when they wanted to invest their savings in real estate to supplement their social security checks, he added.
“A lot of these people are ones who Tom had represented as an attorney, so he knew how much money they had,” according to Robbins.
At the start of the year, Judge Robert Tamietti gave Tom Hastert’s brother Mike Hastert of Walnut, Calif., the authority to handle 50 to 100 Loan Sense accounts frozen since last September’s raid.
Funds from all but two of the accounts have been distributed by Hastert’s brother, and no fresh complaints have come through the district attorney’s office, Newell said.
“Hastert is now doing foreclosures. I can’t believe they’re allowing him to do them, and I can’t believe he’s allowed to touch the files. The whole thing is kind of insult to injury to all of these investors,” Robbins said.
Hastert was issued a desist and refrain order by the department of real estate a year ago, but according to state law, Hastert can legally initiate the foreclosure process even without a real estate license.
The arrangement worries borrowers waiting for some kind of closure in a long drawn-out investigation process.
“These loans can be as fraudulent as the day is long and he can still take back the properties. Because the justice system is so slow, it gives him the opportunity to keep collecting back,” said one anonymous borrower.
Ultimately, it’s Newell and the law enforcement agencies he oversees, not the state, that are responsible for making sure Hastert isn’t doing anything criminal, Newell said.
“He’s not doing any more loans, as far as I can tell,” Newell said.
Investigators are still conducting interviews and sifting through thousands of pages of documents, a process that can take several years, Newell said.
Hastert continues to hold a broker license with the state department of real estate at his law office on Providence Mine Road in Nevada City.
It is believed he is working from Nevada City and owns a residence out of county, said Newell.
“We can’t keep tabs on him every step he takes. At the time of conviction, we’ll reach out and touch him,” the special agent said.
To contact Staff Writer Laura Brown, e-mail email@example.com or call 477-4231.
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