Payback time: Restitution hearing for Hastert victims on March 23
Losses claimed by some victims of former mortgage broker Thomas Hastert are expected to be questioned by his court-appointed attorney, Monica Lynch, at a long-delayed restitution hearing – now scheduled to begin March 23.
Sentencing is set for April 20.
Lynch has said the restitution amounts used to prepare a pre-sentencing report were “exponentially higher” than what they are turning out to be. She is expected to cross-examine some of those claimants during the March hearing and also will present testimony from an expert witness regarding real estate values.
The Former Loan Sense owner had brokered more than $20 million in 270 hard-money loans between 2004 and 2007 for real estate development projects. Hastert used money from area investors to give loans to people wanting to build homes, but prosecutors and 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.
Nevada County Superior Court Judge Robert Tamietti blocked out three days for the restitution hearing, since some of the claims are expected to require direct testimony. According to Rod Gillespie, project coordinator of the Victim Witness Assistance Center, 48 requests for restitution had been received as of October 2009.
In June 2009, Judge Sean Dowling rejected a plea agreement that would have given Hastert five years in state prison. He would have served about two and a half years, after discounts for time served and good behavior.
The Nevada County Probation Department had recommended 13 years of prison. Dowling suggested a sentence of eight years and four months, but Hastert rejected that offer.
Two months later, Hastert entered a new plea based on a potential sentence of six to 15 years. At the August 2009 hearing, Tamietti ordered a debtors exam and warned Hastert that if he was found to be trying to hide assets, he could face the longer prison term.
At the debtors exam in October 2009, Hastert testified that he no longer had any financial assets, other than a minimal amount of money in some IRAs.
He also testified the properties he had owned had all gone into foreclosure, and specifically denied having any offshore bank accounts or any real property out of the country.
He told the court he used Nancy Selecman and Debra Newby as fake, or straw, investors on underfunded loans, but said 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.
“There was an unsupported belief Mr. Hastert had hoarded the money somewhere,” Lynch said. “The court has made great strides by making Mr. Hastert subject himself to a debtors exam.”
Tamietti said at Wednesday’s hearing he had been striving to be as transparent as possible, to address the perception there was some sort of “secret backroom deal” that had been negotiated.
He requested a supplemental report to revise the custodial credit for time served and the sentencing recommendation. A status conference was set for 8:30 a.m. Feb. 24; the restitution hearing will start at 9 a.m. March 23.
To contact Staff Writer Liz Kellar, e-mail email@example.com or call 477-4229.
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