Appraiser gets 18 months in mortgage fraud case

A professional home appraiser in Spokane who delivered inflated appraisals of houses purchased by vulnerable buyers faces 18 months in federal prison and $287,796 in restitution.

John T. Hansen, who owned J. Hansen Appraisals Inc., was the last of five conspirators sentenced in the Century Mortgage fraud investigation.

The fraud lasted from 1997 through 2000 in the Spokane area, where losses by dozens of home buyers are thought to exceed $1 million.

All five defendants were ordered to make restitution, but it will come too late for many victims of the fraud scheme.

Many victims are stuck with homes and mortgages that far exceed the market values of the properties. Others have found themselves unable to keep up with payments and have lost their overpriced homes to foreclosure and bankruptcy.

Hansen was sentenced Friday by U.S. District Judge Robert Whaley, who earlier had sentenced Dale “Sage” Gibbons and Ronald Lee Burger, former co-owners of Century Mortgage; Realtor Sally L. Gibson; and closing agent Cathy M. Patrick.

Hansen, who was allowed to self-report to a federal prison once the location is designated, also must complete three years of parole supervision once he is released from custody.

Hansen, Burger and Patrick pleaded guilty last year to conspiracy to commit wire fraud and agreed to testify as prosecution witnesses against Gibson and Gibbons, who took their cases to trial in U.S. District Court.

Last August, a jury convicted Gibson and Gibbons of multiple counts of conspiracy and wire fraud after a four-week trial involving 410 exhibits and 62 prosecution witnesses.

During the trial, evidence showed that Gibbons and Gibson had sold homes to unsuspecting buyers – many of them first-time home buyers – at inflated prices, partly based on inflated appraisals done by Hansen.

As part of the scheme, Century Mortgage carried out an extensive advertising campaign, promising prospective buyers $100 if they could find and qualify for a home.

Gibbons and Gibson, the jury found, made false and misleading entries on real estate purchase and sale agreements and prepared false gift letters and second deeds of trust.

As a result of those documents, lenders were duped into wiring moneys to fund the home loans, constituting the crime of wire fraud, Assistant U.S. Attorney George Jacobs said in summarizing the case.

Before sentencing Hansen last week, the judge issued an order that allows Gibson and Gibbons to remain out of prison while they appeal their convictions and sentences to the 9th U.S. Circuit Court of Appeals. That appeal process could take a year.

On March 3, Gibbons was sentenced to 60 months in prison followed by three years of supervised release. He was ordered to pay $449,953 in restitution.

Gibson was sentenced to 30 months in prison with three years of supervised release. She was tagged with $264,406 in restitution.

Burger, who pleaded guilty, waived his right of appeal as part of a plea agreement and will self-report to prison. He was sentenced to 37 months in prison and three years of supervised release and was ordered to pay $423,011 in restitution.

Patrick, a “limited practice officer,” was sentenced to serve 60 days in work release and three years on probation and was ordered to pay $148,340 in restitution.

The five defendants were indicted in August 2003 after a two-year investigation by FBI special agent Bernadette Brown and agent Mike Erdahl of the U.S. Department of Housing and Urban Development. They were assisted by W. Kwadwo Boateng of the enforcement unit of the Washington state Department of Financial Institutions.