Oregon Developer and 12 others indicted on Fraud

Acting United States Attorney for Oregon, Kent Robinson announced on November 19 of this year the indictment of thirteen individuals in regard to mortgage fraud in both the commercial real estate and residential real estate arenas. The indictments revolve around Desert Sun Development Inc and its principals. The company and its principals have been charged with defrauding various lending institutions out of over nineteen million dollars.

Desert Sun Development Inc. was incorporated in August of 2004. Desert Sun Development’s President is Tyler Fitzsimons and Shannon Egeland is its Vice President. Jeremy Kendall is hired on as the company’s Office Manager. Court records reveal that by December of 2004 the company had already submitted its first fraudulent bank draw of several that will follow on commercial construction that doesn’t exist. The company’s principals will have misappropriated over two hundred sixty four thousand dollars by May of 2006 and start another scheme to defraud by the fall of that same year. The first of over fifty lawsuits are filed against Desert Sun Development Inc in May of 2006 by business associates, banks and private parties. The companies Office manager will request more fraudulent bank draws in June of 2007 and by October of 2007 the company will file for administrative dissolution with the Oregon Secretary of State.

The indictment charges that Mr. Fitzsimons and Mr. Egeland used proceeds from Desert Sun Development Inc. to purchase two Dodge Vipers, a Ferrari, a speed boat and to pay for Mr. Egeland’s divorce settlement.

The case was transferred to The United States Attorney Office in Oregon by the Oregon Division of Finance and Corporate Securities Office as the crimes involved fall under federal jurisdiction due to the defrauding of lending institutions.

Tyler Fitzsimons, age 31, from Prineville, Oregon, Shannon Egeland, age 35 from La Grande, Oregon, Jeremy Kendall, age 33, from Redmond, Oregon, and John Partin, age 55, owner of Advanced Steel Systems, Inc were indicted on charges of conspiracy to defraud lending institutions exceeding over nine million dollars. Robert Brink, age 58, from Junction City, Oregon, Loan Officer for Umpqua Bank was charged with making fraudulent statements to a financial institution. Kevin Palotay, age 46, owner of Building Solutions LLC was charged with filing fraudulent invoices for building materials. Garret Towne was charged with forging signatures. Shaun Little, from Bend, Oregon, a mortgage broker for Waterfield Financial Group and Del Barber, Jr., from Bend, Oregon were both charged with preparing and submitting fraudulent mortgage applications. Jeffery Sprague, from Bend, Oregon, a loan officer for West Coast Bank and Barbara Hotchkiss, from Bend, Oregon, a processor for West Coast Bank were both charged with preparing and submitting fraudulent mortgage applications. Teresa, Ausbrooks, from Bend, Oregon, and an escrow agent was charged with falsifying her monthly income and failure to disclose liabilities on an application for mortgage. Michael Wilson, formerly from Redmond, Oregon was charged with falsifying his spouse’s income, failure to disclosure liabilities and falsifying personal bank information.

The individuals named in the indictments have not been arrested as of November 29 however all have been summons to appear before in Federal Court in Eugene, Oregon on December 16th for arraignment.

Community First Bank, Umpqua Bank, West Coast Bank, Columbia River Bank, Countrywide Bank FSB aka Bank of America are a few of the banks that were defrauded by Fitzsimons and his group of conspirators.

The conspirators in regard to the Commercial Construction loan fraud case allegedly processed and request construction loans from several financial institutions. The conspirators were granted the loans however never built on the land and continued to make draws on the construction loans for improvements on the buildings supposedly constructed on the properties involved. The funds were used for personal gain among the conspirators. Lavish vehicles and custom speed boats were purchased with the monies drawn off the construction loans. The conspirators used fraudulent invoices for building materials and services and processed them through Mr. Partin’s legitimate business to defraud the financial institutions involved. The draws were paid out largely because of the conspirators inside man. Mr. Brink used his position as a loan officer to approve the request in regard to the draws. Mr. Brink’s duty as a loan officer was to verify that commercial construction was indeed in process prior to recommending draws on the loans provided. The lots in which Desert Sun Development Inc used as their front to obtain monies have all been reclaimed by the financial institutions involved with the exception of one. Desert Sun Holdings which is the parent company to Desert Sun Development Inc owns the lot that is currently valued at eight hundred thirty five thousand dollars according to Deschutes County property records.

The conspirators in regard to the Residential Mortgage fraud set up an Employee House Program which Desert Sun Development Inc used as their version of a 401k as they did not offer a retirement plan. The program was offered to both family and friends of employees of company. The plan allowed those who participated in the program to purchase a home that was previously built and the company would assist those who participated with the mortgage payments until the property was sold. Participants further agreed to divide the profits from the sale of the property when it was sold. Participants choosing not to build a home through the company agreed to use Desert Sun Development Inc as their general constructor. The company in turn pays interest on the construction loans involved and participants could deduct those payments on their taxes. The conspirators often deposited funds into the participant’s personal bank accounts if the participant was lacking in that area to get qualified. When submitting the mortgage application to the financial institutions this information was not disclosed or falsified on the mortgage application.  Signatures were often forged during the process to get loans funded. Several of the homes involved in this Employee House Program have been foreclosed on by the financial institutions involved as the owners could not pay on them.

The charges against the conspirators have maximum sentences that carry terms from anywhere between five to 30 years in federal prison and fines of two hundred fifty thousand dollars depending on the count and a one million dollar fine for bank and wire fraud affecting a financial institution.