(The Register-Guard) A key player in a huge mortgage fraud scheme that roiled the Central Oregon real estate market was sentenced Wednesday to 7 1/2 years in a federal prison.
In addition to his prison sentence, Tyler Fitzsimons also was ordered to pay $22.5 million in restitution to help cover losses from the collapse of Desert Sun Development, a company that grew rapidly with the inflation of the Central Oregon real estate bubble. Fitzsimons was president and co-founder of the company.
Fitzsimons, 34, formerly of Prineville, earlier pleaded guilty to five counts from a 23-count indictment charging him with bank fraud and money laundering. He was one of 13 people charged in the case, and several lower-level players already have pleaded guilty and been sentenced to shorter prison terms.
A second man connected to the Desert Sun fraud also was sentenced Wednesday in U.S. District Court in Eugene. Jeremy Kendall, the firm's office manager, received an 18-month sentence on four counts.
Kendall's sentence reflected the substantial help he provided government investigators trying to piece together the Desert Sun case. Assistant U.S. Attorney Scott Bradford said Kendall's cooperation was instrumental in uncovering the scheme and bringing charges against the other defendants.
"He really did help break the case for us," Bradford said.
Still facing sentencing is Shannon Egeland, who co-founded the company with Fitzsimons and served as vice president. The government alleges that Egeland was a ringleader of the scheme and is asking for a sentence of almost 20 years when Egeland appears in court Jan. 29.
The Desert Sun scheme involved about 70 residential projects and 10 commercial projects. Participants allegedly falsified loan application forms, lied about construction progress and falsely inflated the bank accounts of people applying for mortgages to make it appear they qualified for a large loan.
Part of the scheme involved creating fictitious documents that made it appear that work on a construction project was well underway so that banks would release loan funds.
In fact, on a number of projects no work was ever done and on others much less had been finished than was claimed.
In other cases, Desert Sun principals would deposit money in the bank accounts of people applying for construction loans to inflate their net worth and then withdraw the money once a loan was approved, a trick called "seasoning."
Bradford said Fitzsimons was well aware that he was breaking the law but continued the scheme to finance a lavish lifestyle that included expensive cars, travel and houses.
"The defendant knew better than to lie and cheat," Bradford said. "The defendant wreaked havoc on the Central Oregon construction and banking industries."
Fitzsimons apologized for his conduct and said he takes full responsibility. He said he wants to make amends and is more afraid of not being able to pay restitution than he is of going to prison.
"I can't express my regret, not only for what I've caused but also for the people I drug in with me," he told U.S. District Judge Ann Aiken. "It's a burden I'll have to carry forever."
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