Mortgage company head with 4S Ranch ties sentenced for fraud
SAN DIEGO (CNS) - The head of a San Diego mortgage company was sentenced Monday to serve more than three years in prison for creating bogus property purchase agreements that netted him more than $1 million in illicit profits.
In addition to handing down the 41-month custody term to Brian Nels Peterson of San Diego, District Court Judge John Houston ordered him to pay a $50,000 fine and $542,075 in restitution to Citi Mortgage.
Peterson, who ran a firm called Terra Finance, admitted that he devised a scheme to procure mortgage funds through deceptive means, including falsifying income on applications to qualify borrowers for loans.
The company facilitated loans in several San Diego neighborhoods, including the upscale Ivy Gate housing development in 4S Ranch and the Rolling Hills subdivision in southern San Diego County.
In its heyday, Terra Finance generated between $80 million and $100 million worth of residential mortgage loans, according to court documents.
Peterson, who held a state broker’s license, personally signed most of the fraudulent loan applications containing false income, employment, asset and liability information submitted under his license number, prosecutors alleged.
Peterson earned more than $1 million from his fraudulent loan business through broker’s fees, kickbacks from cash-out refinances and other sources in 2006 alone. He admitted that he failed to report that income and evaded taxes by various means, including arranging to be paid in cash.
Peterson also orchestrated fraudulent conduct on the part of employees, borrowers and industry professionals as the head of Terra Finance, according to the U.S. Attorney’s Office in San Diego.
Peterson recruited a cadre of loan officers, loan processors, office staff, real-estate investors and other industry professionals to participate in his scheme, including appraisers, tax preparers and lender representatives, prosecutors contended.
The knowing participants included people who fabricated job titles and income figures so borrowers would appear to qualify for a loan; added borrowers to another person’s bank account and then had the borrowers falsely claim the funds in the account as assets; created phony “verifications” of information in loan application; and prepared appraisals “to order,” based on the property value Peterson sought. Borrowers used a succession of fake loan applications to purchase multiple properties that they could not afford.
The initial loans were often re-financed - through fraudulent loan applications - to fund additional purchases, in an upward spiral of home ownership built on a foundation of fraud.
Peterson’s real-estate empire eventually crumbled, resulting in millions of dollars of losses, dozens of foreclosures, numerous neighborhoods depressed and the indictment of 26 loan officers, loan processors, appraisers, borrowers, and a lender representative, all of whom participated in loans with Terra Finance