Plea deal in North County fraud case was illegal, DA's Office says

A judge should not have reduced seven felonies to misdemeanors in a North County fraud case, because he bypassed victims’ rights, according to a motion filed by the San Luis Obispo County District Attorney’s Office.

However, a defense motion claims the District Attorney’s Office supported that arrangement before opposing it.

Lenders Rodney Virgil Jarmin, 75, and Tammy Marian Jordan, 53, were charged with seven felonies for selling securities by means of false statements or omissions, with five enhancements. The pair, who owned Real Property Lenders, was accused of failing to disclose to investors that the builders they had worked with had defaulted on loans and that previous investors had not been paid dividends.

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

However, on June 10, as a jury was being selected in the case, the defendants pleaded no contest to seven misdemeanors. Under the deal, Jarmin’s restitution would be $107,200, and Jordan’s would be $7,500.

A day later, however, the District Attorney’s Office filed a motion to undo that, saying the charges should never have been reduced. After a June 12 court hearing, both the prosecution and defense were ordered to submit further motions.

In his proposed settlement statement filed last week, Robert Sanger, Jarmin’s attorney, offered his version of what occurred — a timeline the District Attorney’s Office claims is “highly contested.”

According to Sanger, a settlement in the case had been discussed over the past few years, but the amount of restitution owed was always a stumbling point. As a result, Sanger said he was ready to contest the charges at trial since there was “no embezzlement, no misdirection of funds and reliance on advice of reputable counsel regarding materiality.”

Materiality refers to the importance of the information about previous investors to the current ones.

A trial did begin. But, as jury selection was taking place, Sanger wrote, Deputy District Attorney Steve von Dohlen said he would “talk to his people” and get back to Mr. Sanger about a settlement.

Later that day, Sanger wrote, von Dohlen agreed to meet with him, Superior Court Judge Donald Umhofer and Pierre Blahnik, Jordan’s attorney, in the judge’s chambers to discuss a possible resolution.

At that time, Sanger claims, the parties discussed a plea to one misdemeanor count.

“(Von Dohlen) went on to explain that he did not want to take responsibility for reducing the case to a misdemeanor but had no objection if the judge did it,” Sanger wrote.

Meanwhile, Sanger added, Umhofer suggested a good part of the losses suffered by the investors was due to the crash in the housing market.

In order to ensure the plea would not be admissible in a civil case, Sanger wrote, Umhofer said he could reduce the charges to misdemeanors before a plea was entered.

“Mr. von Dohlen agreed,” Sanger wrote.

Later that day, Sanger wrote, “Mr. von Dohlen said that he had talked to his superiors and that he could only go through with the deal if the defendants plead to all seven counts.”

All parties agreed the counts would be reduced to misdemeanors before a guilty plea was entered and that enhancements would be stricken, Sanger wrote.

Later, the agreement was announced in open court, though few details of the settlement talks were revealed.

According to a court transcript, Umhofer said he was going to reduce the charges to misdemeanors, adding that the defendants did not intend to defraud their clients and that they had relied on advice of counsel regarding materiality.

All parties agreed that the investors would be able to speak about restitution prior to sentencing, Sanger wrote.

The District Attorney’s Office, however, said there was a misunderstanding regarding the plea, and now it wants the deal revoked.

Sanger’s view of the events, the motion notes, comes from off-the-record conversations that were not recorded “and do nothing to settle the record between the parties as to what was said.”

Even if von Dohlen didn’t object to it at the time, the prosecution claims, the deal is illegal.

According to its motion to reconsider, filed Wednesday, the deal is illegal because it was made before consulting with victims and because it capped the restitution amount. Also, the motion noted, a judge does not have the authority to reduce charges at that stage of the proceedings.

“Neither the court on its own, nor the parties by agreement, can bypass these rights of victims,” the motion reads. “The trial court’s actions on June 10 must be set aside, and the defendants should be allowed to withdraw their pleas and proceed to trial.”

Under California’s constitution, the motion reads, a plea agreement cannot limit restitution to an amount that will not fully compensate victims for their losses unless there are “extraordinary and compelling reasons.”

“It is the People’s position that the total amount of restitution owing to the victims of these crimes far exceeds $107,200,” the motion states.

“A court’s reasons for awarding less than full restitution must be stated on the record,” the latest motion continued. While the judge did make a few comments on record, the motion adds, “the record is completely void of any ‘clear and compelling reasons for (the court’s) decision.’”

Umhofer cannot offer his version of what happened because judges cannot ethically comment on pending cases.

Under the state constitution and voter-approved Marsy’s Law, the prosecution added, victims in the case had to be given a right to voice their concerns before a plea.

“By reducing the charges to misdemeanors at an unauthorized stage of the proceedings and without hearing from the victims, the Court acted in excess of its jurisdiction and without being informed of all issues that bear on whether reduction is appropriate,” the motion states. “Victims are entitled to have a meaningful opportunity to protest a plea bargain that will allow a defendant to escape the punishment which the victim or next of kin feels is appropriate to the crime.”

A hearing on the matter is set to be heard July 22 with Umhofer.

Related stories from San Luis Obispo Tribune