Embezzler faces victims, probing questions
Where’s the money?
Former Loan Sense owner Thomas Hastert was in Nevada County Superior Court Thursday for a debtors examination, during which his finances were studied in an effort to determine possible restitution.
Hastert spent seven hours in the hot seat. But at the end of the sometimes contentious hearing – during which Hastert was reprimanded for calling one victim a liar – the question of what happened to the stolen money remained.
Hastert pleaded no contest 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 for real estate development projects. He faces six to 15 years in prison.
Superior Court Judge Robert Tamietti has warned him that if he was found to be trying to hide assets, he could face a harsher sentence. Hastert testified Thursday that he no longer had any financial assets other than a minimal amount of money in some IRAs.
Hastert also testified that properties he had owned had all gone into foreclosure. He said he retained one vehicle, a 1991 Cadillac, which he did not plan to sell. He specifically denied having any off-shore bank accounts or any real property out of the country.
Hastert told the court he used Nancy Selecman and Debra Newby as fake, or straw, investors on underfunded loans, but told the court they were beneficiaries on paper only and never profited from being named on deeds of trust. He said the expectation was that additional investors would be found for those loans and the straw people would then assign their interest to the legitimate lenders.
Hastert said that when the economy started to sour in early 2007, he moved money in and out of construction accounts to pay draws and bills, but insisted it was all refunded.
He estimated about $120,000 was moved illegally, but told the court he used funds from his law practice to keep the mortgage business afloat and service the loans.
“Is it your belief that all the money that was embezzled was returned?” asked State Deputy Attorney General Keith Lyon.
“Yes,” Hastert replied, drawing protests from the victims in the audience.
Lyon detailed federal, state and county tax liens against Hastert dating from 1997 to 2006 of more than $200,000, as well as $35,000 in back child support and other unpaid bills.
“When was the last year you actually paid any taxes?” he asked Hastert, who said he couldn’t recall.
“Money was coming in at a pretty good clip (in 2005 and 2006),” Lyon said. “Where was the money going? What were you spending it on?”
Hastert told the court that when the economy went bad, he decided not to walk away from Loan Sense.
“I didn’t use the money for my own benefit,” he said. “I didn’t take trips, I didn’t send money to relatives – I fell behind on my taxes and child support, I worked for two years without getting paid.”
Several victims also grilled Hastert about loans. Bob Brewer, who struggled at times with phrasing questions that would be acceptable to Tamietti, questioned Hastert about a construction loan in which he alleged no inspections were done and many payments were not made.
At one point, Hastert lost his composure, telling Brewer, “You’re lying and you’re being caught at it.”
Hastert testified, in response to questions by victim Greg Pellerin, that Pellerin’s construction loan was fully funded. After the hearing, however, Pellerin said that was not true.
“Everybody knows he’s lying,” Pellerin said. “He did a good job of hiding behind ‘I don’t recall.’ “
Next up for Hastert are restitution hearings, which Tamietti tentatively scheduled for Jan. 19-21.
According to Rod Gillespie, project coordinator of the Victim Witness Assistance Center, 48 requests for restitution have been received so far.
To contact Staff Writer Liz Kellar, e-mail email@example.com or call 477-4229.
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