Three Co-Conspirators Who Participated in Massive Mortgage Fraud Sentenced to Prison
Defendants Worked with Shawn Portmann in Scheme That Crippled Pierce Commercial Bank

Three former employees of now defunct Pierce Commercial Bank were sentenced to prison terms today for their roles in the mortgage fraud scheme that substantially contributed to the demise of the bank, announced U.S. Attorney Jenny A. Durkan. The three repeatedly created fraudulent documents in loan files and provided false information to make the loans appear sound. Some of the employees were veterans of the mortgage industry who followed the conspiracy leader Shawn Portmann to PC Bank Home Loans, a subsidiary of Pierce Commercial Bank, when he offered them substantially higher salaries than they were making elsewhere. These defendants collected those salaries while facilitating the fraud that enriched Portmann and ultimately caused Pierce Commercial Bank to fail.

“The conspiracy that brought down Pierce Commercial Bank required participants at every level to abandon their ethics and their moral compass and repeatedly engage in fraud,” said U.S. Attorney Jenny A. Durkan. “These defendants, instead of creating fraudulent documents and processing false loan files, had an obligation to blow the whistle on Shawn Portmann—instead, they chose to continue the wrongdoing, which hurt many families and destroyed the bank.”

Jill Reding, 48, of Puyallup, Washington, was sentenced today to six months in prison and three years of supervised release. Reding was a loan processor at PC Bank Home Loans who submitted dozens of fraudulent loan applications to Pierce Commercial Bank underwriters. Reding had worked in the mortgage industry for six years and had worked with Shawn Portmann before coming to PC Bank Home Loans when Portmann offered her a higher salary. Reding’s salary was eventually $2,400 higher per month than what she was making at her prior employer.

Tonya M. Ruf, 37, of Puyallup, was sentenced today to seven months in prison and three years of supervised release. Ruf worked as a loan processor and later as an underwriter at PC Bank Home Loans. She, too, had worked with Portmann prior to her employment at PC Bank Home Loans. She left the bank for another employer and then returned as an underwriter for PC Bank Home Loans working on Portmann’s fraudulent loan applications. Ruf approved loans that were originated by Portmann even though she knew they were filled with fraudulent documents and false statements.

Katherine J. Friske, 54, of Menifee, California, was sentenced today to four months in prison and three years of supervised release. Friske was a loan processor at PC Bank Home Loans. Friske, too, followed Portmann to the company when he offered her almost $800 more a month than her previous employer. During the two years that she worked at PC Bank Home Loans, Friske submitted dozens of fraudulent loan applications—containing false verifications of employment, false lease agreements, and false assertions of owner-occupancy.

Jason L. Rick, 42, of Renton, Washington, will be sentenced next week. Rick was a loan processor who worked exclusively on Portmann’s files at PC Bank Home Loans. Rick was paid $70,000 a year—75 percent more than at his previous employer. Rick prepared numerous false documents that were inserted in Portmann generated loan files.

“Mortgage fraud has stolen the dream of home ownership from too many in our communities,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific-Northwest. “When fraudsters use their position to aid and assist others in developing schemes of lies and deception, they are on the wrong side of the law.”

From 2004 to 2008, Portmann closed almost $1 billion in loans, and he earned over $1.7 million per year. Many of these loans contained false and fraudulent documents. A review of a sample of conventional and FHA loans revealed that Portmann and his staff closed over 300 loans with false and fraudulent information. More than half of these loans have defaulted or otherwise caused loss to Pierce Commercial Bank, secondary investors, and/or the FHA, resulting in an estimated loss of $10 million.

Shawn Portman and five other co-conspirators are scheduled for sentencing in January 2013. At that time, Judge Benjamin H. Settle will set a restitution amount, a share of which will be owed by all the defendants in the conspiracy.

The case is being investigated by the FBI, the HUD Office of Inspector General (HUD-OIG), Internal Revenue Service Office of Criminal Investigation (IRS-CI), and the United States Postal Inspection Service. The case is being prosecuted by Assistant United States Attorneys Brian Werner and Arlen Storm.