LOS ANGELES, AUG. 20 -- A former securities broker who masterminded a complex mortgage scheme that bilked banks and thrifts out of nearly $150 million was sentenced today to 15 years in prison and ordered to pay $70.7 million in restitution.
U.S. District Court Judge Dickran Tevrizian imposed the sentence and restitution -- believed to be the largest ever ordered of an individual in a savings and loan fraud case -- on David Feldman, 50, a Vietnam War veteran and top graduate of the U.S. Military Academy.
Codefendants Kent B. Rogers, 51, of Huntington Beach, Calif., and George C. Ash Jr., 45, of Alta Loma, Calif., pleaded guilty to five charges each and agreed to cooperate with prosecutors in the case against Feldman.
The restitution will be paid to Bank of America, which, as trustee for most of the mortgage loans in the scheme, absorbed the most losses, Special Assistant U.S. Attorney Sharon McCaslin said.
The bank filed a separate civil racketeering lawsuit against Feldman as a result of the scheme, and the judge ordered that Feldman pay the largest amount of restitution to arise out of the two cases. The civil case has yet to be resolved.
The judge said Feldman's scheme -- part of which was executed from a prison where he was serving time on a similar case -- typified the frauds that triggered the nation's multibillion-dollar savings and loan crises.
A federal jury convicted Feldman June 8 on three counts of mail fraud, and acquitted him of two other mail fraud counts.
During a two-month trial, prosecutors alleged Feldman oversaw an elaborate scheme in which some $144 million in mostly defaulted mortgage loans were sold to 20 banks and thrifts in nine states between 1982 and 1984.
Feldman, through his brokerage firm, National Mortgage Equity Corp. and several business associates, pooled real estate mortgages and convinced the lending institutions to invest in the pools by promising high interest rates and guaranteeing them protection against borrower default. In actuality, 90 percent of the properties were already in default, and Glacier General Assurance, which was guaranteeing most of the NMEC loans, could not cover the losses. As a result, Bank of America, the trustee of most of the mortgage pools, lost the most funds.
Prosecutors had sought $43.8 million restitution from Feldman to cover losses suffered by the bank, but Tevrizian added to that sum an additional $26.9 million spent in legal and other costs related to the case.
''I think justice was done in this case,'' McCaslin said.