Crime

Investors upset over plea deal for North County lenders accused of fraud

The alleged victims in a North County fraud case say they should have been notified before the defendants’ seven felonies were reduced to misdemeanors.

But during a hearing on the issue Wednesday, a defense attorney said the San Luis Obispo District Attorney’s Office agreed to a deal that would result in no further jail time for the accused and is now trying to reverse it.

The matter is expected to be settled in a July 22 hearing, following legal motions.

Lenders Rodney Virgil Jarmin, 75, and Tammy Marian Jordan, 53, were each charged in April 2011 with seven felonies for selling securities by means of false statements or omissions, with five enhancements.

According to the District Attorney’s Office, the pair, who owned Real Property Lenders, acted illegally when they 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.

More than 80 investors submitted restitution claims to the probation department, which recommended more than $8 million in restitution, according to a motion filed by the District Attorney’s Office.

Both Jarmin and Jordan were headed to trial last week. But as attorneys were selecting a jury for their trial, the defendants agreed to plead no contest June 10 to all seven misdemeanor charges.

In the prosecution’s motion to reconsider, filed June 12, the District Attorney’s Office alleges that Superior Court Judge Donald Umhofer reduced the charges to misdemeanors before a plea was made.

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

According to the minutes of the plea, restitution was set at $107,000 for Jarmin and $7,500 for Jordan.

In a hearing on that motion Wednesday, Jarmin’s attorney, Robert Sanger, said the prosecution now has “buyer’s remorse,” regretting its decision to enter into a plea deal. Sanger also accused the District Attorney’s Office of being unprofessional, though he did not elaborate.

Umhofer told deputy district attorney Steve von Dohlen that he can’t blame the court for the entire flap since he did not object to the plea.

“You might have to fall on your sword,” he said.

Assistant District Attorney Lee Cunningham said von Dohlen didn’t object because he believed the defendants would be convicted of felonies.

“I don’t think everybody was on the same page,” Cunningham said.

Even if a plea was agreed upon, the prosecution also charges that under the state’s Victim’s Bill of Rights — also known as Marsy’s Law — victims in the case should have been notified of any changes in the pleas or restitution ahead of time.

Linda Gerpheide, one of the alleged victims, said she was never notified of a possible plea bargain or a reduction in charges or restitution — which she would have objected to.

“We have waited over four years for a fair trial, and we want justice to be served to us,” she said. “We were victimized in an economic fraud case, and we want to see this go to trial.”

Investor Jim Pope called the events a “train wreck.”

“We were robbed of justice,” said Pope, who was preparing to testify at trial when he heard a plea was reached.

According to a transcript from the June 10 change of plea, Umhofer said, “It is my understanding that the defendants are willing to plead guilty to each of the seven counts as a misdemeanor.”

He also asked von Dohlen if he had been in discussions with the parties and was satisfied that the readily available restitution was $107,200.

“Yes, your honor,” von Dohlen responded. “That is correct.”

“I hereby exercise my discretion … to make each of these offenses a misdemeanor,” Umhofer said, according to the court transcript. Then he gave his reasoning. “I’m satisfied that the defendants had no intent to defraud their clients, that what they are charged with is not alleged fraud,” he said.

Umhofer continued: “The defendants have a possibly good argument that they did not know that disclosures were needed to be made because of materiality, that they relied on the advice of counsel regarding whether they should have known about the materiality of the failures to pay by other borrowers as it related to instant investment.”

If he had been asked about it, Pope said, he would have disagreed.

“That was information withheld from me,” he said. “Knowingly withholding information is fraud.”

According to the prosecution motion, Pope’s $45,000 investment was deposited by Real Property Lenders 10 days after a meeting between RPL and that project’s borrower builder, during which an agreement was reached that interest payments to investors would be suspended on that project.

Had he known that, Pope said, he would not have invested his money.

“I was told it was a good investment at the time,” Pope said.

In its motion, the prosecution contends that the judge did not have a right to reduce the charges or the restitution at that point in the case. That issue — along with the prosecution’s failure to object on June 10 — will be argued in future motions, prior to the July 22 hearing.

“What has been done needs to be unwound,” von Dohlen said in court.

If the prosecution gets the felonies reinstated, the case could head back to trial.

Gerpheide said she’s hopeful that will happen.

Misdemeanor convictions, she said, are not enough.

“That’s like a slap on the hand,” she said.

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