Judge reverses ruling on fraud case, reinstates felony charges

A judge ruled Wednesday that he was wrong to reduce seven felony charges to misdemeanors in a North County fraud case. As a result, all felony charges were reinstated against the owners of Real Property Lenders, who will proceed toward a trial for a second time.

Rodney Virgil Jarmin, 75, and Tammy Marian Jordan, 53, were prepared to go to trial last month on charges of selling securities by means of false statements or omissions. But, as a jury was being selected, a deal was struck that would have allowed the defendants to plead no contest to the charges as misdemeanors. Meanwhile, under the deal, Jarmin would have paid $107,200 in restitution, while Jordan would pay $7,500.

But the District Attorney’s Office filed a motion to undo the deal, saying charges should not have been reduced and that they did not consent to the change.

According to court records, the parties had discussed possible pleas for a while. On July 10, with attorneys for the defense and prosecution present, Superior Court Judge Donald Umhofer reduced the charges to misdemeanors before no contest pleas were entered.

At a hearing for the prosecution’s motion Wednesday, Umhofer overturned his own actions, saying a judge is only allowed to reduce charges at a preliminary hearing or sentencing. While the District Attorney’s Office did not object to the reduction at the time, he said, the law still allows them to file a motion to undo the deal.

Roughly 80 investors have submitted restitution claims to the probation department, which recommended more than $8 million in restitution.

According to the prosecution, the defendants failed to disclose to investors that the builders they had worked with had defaulted on loans and that previous investors had not been paid dividends.

Virge Perelli-Minetti, an investor who attended the hearing, said misdemeanor pleas would not have been sufficient in the case.

“I equate a misdemeanor with stealing cigarettes at a liquor store, not millions of dollars from investors,” she said.

Investor Patrice Zubillaga said the proposed restitution was too low.

“The restitution that they proposed doesn’t even cover a fraction of one of the 80 people,” she said.

In a motion filed with the court, however, Jordan’s attorney, Pierre Blahnik, said the restitution amounts were appropriate. The two defendants merely committed a technical error — failing to update a circular for the sale of securities to reflect that multiple notes of default had been filed for real estate projects that were separate from the projects on which investments were being made. And, he added, an attorney who advised the defendants had told them they didn’t need to update it.

The defendants, Blahnik wrote, did not gain from investor losses.

“Mrs. Jordan herself never profited from her ownership in the company and went bankrupt in 2009 and lost her house in 2010,” he wrote.

The defendants warned the investors, Blahnik wrote, that the investments were risky and that high-risk, high-yield investments were subject to fluctuations in the housing market “and that investors should not buy into the properties unless they could afford to lose their entire investment.”

Because the housing market faltered, the defendants, he wrote, were in the wrong business at the wrong time.

Since the plea bargain, he wrote, the prosecution has been pressured by angry investors “who wish to scapegoat the defendants for losses suffered after the investors knowingly made high-risk, high-

yield investments that failed, when such failure was 100 percent the result of the crash in the housing market and 0 percent because of the defendants’ conduct.”

In his motions, Jarmin attorney Robert Sanger wrote that there was no embezzlement or misdirection of funds.

In court, Umhofer also said the housing market and risky investments contributed to the losses, which made the lower restitution appropriate. But investor Jim Pope disagreed.

"When we go to trial, we're going to show otherwise," he said after the hearing.

When a possible deal was being discussed, Sanger expressed concern that a plea would be admissible in civil court. That's when Umhofer suggested he could reduce the charges before a plea was entered.

After reviewing the law, he said Wednesday, that he did not have the authority to do that.

Under the voter-approved Marsy's Law, victims have to be given a right to voice their concerns before a plea.

In its motions, the district attorney's office said it did not agree to the plea — and said "there was never a 'meeting of the minds' with respect to the resolution of the case."

Pope said he's glad a jury will be able to hear the case.

"It's a trial that will determine the severity and the guilt of the defendants," he said.

Umhofer said he will remove himself from the case because there is a perception that he has rendered opinions about it, as proven, he said, by negative letters the court has received and letters to the editor.

The defendants will return to court July 29, at which time a trial date will be chosen.

This story was originally published July 22, 2015 at 11:25 AM with the headline "Judge reverses ruling on fraud case, reinstates felony charges."