Appellate court upholds plea deal in Real Property Lender fraud case

A California appellate court has recommended that plea deals granted to two former San Luis Obispo County mortgage loan brokers accused of fraud should stand, which could allow the brokers to avoid a trial and jail time and pay just $114,400 in restitution for the $8.2 million determined to be owed to about 80 investors.

The Feb. 11 decision by the Second District Court of Appeal came after a local judge overturned the deals granted to Rodney Virgil Jarmin, 75, and Tammy Marian Jordan, 53, former owners of Paso Robles-based Real Property Lenders.

In its alternative writ of mandate in the case, the appellate court tentatively ruled that San Luis Obispo Superior Court should honor the deals that the lower court had first accepted and then withdrew.

Alternative writ of mandates aren’t final legal decisions but indications of how the court will rule should formal proceedings continue in appellate court.

A Superior Court judge now has until next month to decide whether to accept the misdemeanor plea deals or allow the District Attorney’s Office to contest the writ in formal proceedings in appellate court.

If the lower court chooses the latter option, Jordan and Jarmin’s attorneys will have until April 1 to file their response and an appellate court hearing will be scheduled in Ventura.

Pierre Blahnik, Jordan’s attorney, and Robert Sanger, Jarmin’s attorney, both declined to comment on the writ Wednesday, noting that the case is still pending.

District Attorney Dan Dow said he wants the chance to argue against the plea deals.

“We will continue to work diligently to ensure that the victims have an opportunity to be heard before any sentencing or restitution is ordered by the court,” Dow said.

In March 2011, the DA’s Office filed felony charges involving misrepresentations in the sales of securities against Jarmin and Jordan. Prosecutors alleged that RPL solicited investors and borrowers for high-interest loans secured by real estate.

Hard money lenders provide money to borrowers at a quicker rate than most banks but at higher interest rates, typically between 12 and 14 percent. The lenders pool investor money into securities backed by real estate deeds and are considered a high-risk/high-return investment.

In 2007, according to a filing by the Department of Corporations, RPL had more than $55 million in real estate loans.

In 2009, the Department of Real Estate accused RPL of fraud and dishonest dealings.

SLO County Deputy District Attorney Steve Von Dohlen previously argued that RPL failed to notify new investors that they had stopped paying dividends on past investors’ loans following the 2008 economic recession. They also allegedly failed to notify new investors that the developers they loaned money to defaulted on those loans.

Roughly 80 investors submitted restitution claims in the case, and the San Luis Obispo County Probation Department recommended just under $8.2 million in restitution.

Jordan and Jarmin pleaded not guilty to the charges.

On the third day of jury selection in June 2015, both defendants struck a plea deal with prosecutors and Superior Court Judge Donald Umhofer that reduced all seven felonies to misdemeanors that would not require jail time in exchange for no contest pleas and restitution in the amount of $107,200 for Jarmin and $7,200 for Jordan.

The DA’s Office did not object to the deal at the time, and it was accepted by Umhofer.

However, prosecutors on June 12 filed a motion to set aside the misdemeanor pleas, arguing they were not part of the deal.

“Courts are not allowed to plea bargain criminal cases,” the motion reads.

In addition, the DA’s Office said that under the state’s Victim’s Bill of Rights, victims in the case should have been notified prior to any plea bargain.

Assistant DA Lee Cunningham told The Tribune at the time he “(didn’t) think everybody was on the same page” over the specifics of the plea.

At a June 17 hearing on the motion, Jarmin attorney Sanger alleged the DA’s Office had “buyer’s remorse” over the deal and called the office unprofessional.

On July 22, Umhofer overturned his own ruling and granted the DA’s motion, and the trial was set to resume under the original charges.

Jordan and Jarmin’s attorneys then appealed that ruling to the Court of Appeals, which issued a temporary stay in the local case.

On Feb. 11, the appellate court issued the writ, saying that the plea bargain should stand and indicating it would side with Jarmin and Jordan should the appellate case continue.

“Where the prosecution has, on the record, accepted a plea bargain and it has been approved by the court, ‘both the prosecution and the defendant are entitled to the benefits for which they have bargained,’” the appellate document reads, citing case law. “The failure of the prosecutor to fulfill his promise affects the fairness, integrity, and public reputation of judicial proceedings.”

It is unclear who will now make that decision on behalf of the Superior Court, as Umhofer has since recused himself from the case given his overturning of the plea deal. Presiding Judge Barry LaBarbera could assign another Superior Court judge to the case.

“Procedurally, this case is a little odd,” Dow said.

Should the Superior Court not oppose the appellate writ, the case against Jarmin and Jordan would go to sentencing and restitution hearings in the coming months.

This story was originally published February 17, 2016 at 5:41 PM with the headline "Appellate court upholds plea deal in Real Property Lender fraud case."