Three women who helped a Puyallup banker become Pierce County’s king of bad mortgage loans learned Wednesday the price of their perfidy.
Jill Reding, Tonya Ruf and Katherine Friske were all sentenced to federal prison terms for helping Shawn L. Portmann as he pushed through millions in home loans based on lies or inaccurate information.
Many people who received the loans later defaulted, which contributed to the demise of Tacoma’s Pierce Commercial Bank during the worst economic recession to hit the nation in decades.
“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,” U.S. Attorney Jenny Durkan said.
“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.”
Reding, a 48-year-old Puyallup resident, was sentenced to six months in prison. Federal prosecutors said she submitted dozens of fraudulent loan applications while working for Portmann at PC Bank Home Loans.
Ruf, 37 also of Puyallup, received a seven-month sentence. She worked as a loan officer and underwriter at PC Bank Home Loans. Prosecutors said she approved home loans originated by Portmann “even though she knew they were filled with fraudulent documents and false statements.”
Friske, 54, was sentenced to four months in prison. Prosecutors said the California resident worked as a loan processor at PC Bank Home Loans and submitted “dozens of fraudulent loan applications.”
Prosecutors said in court documents that Portmann paid the women substantially more than they made at their previous jobs to come to work for him.
Portmann and six other co-conspirators are to be sentenced this month and next month on various convictions.
Court documents show Portmann and his employees closed almost $1 billion in loans from 2004 to 2008. More than 300 of those loan applications contained false information. Half of those went into default, resulting in $10 million in losses to Pierce Commercial Bank and other investors.
It also drove many of the families that received the loans into foreclosure, federal officials said.
“Mortgage fraud has stolen the dream of home ownership from too many in our communities,” said Kenneth Hines, IRS special agent in charge of the Pacific Northwest.
Portmann is a former senior vice president at Pierce Commercial Bank who, along with his associates, operated semi-autonomously as PC Bank Home Loans.
Attorneys for the three women sentenced Wednesday said their clients had spotless records before hooking up with Portmann, whom they described as overbearing and abusive.
In a letter to U.S. District Judge Benjamin Settle, Ruf wrote that she continued to work for Portmann because she was a single mother who really needed her job. She wrote that she researched filing a complaint against Portmann for creating a hostile work environment, but decided he would win.
“Not only did he have power, he had money, lots of money,” Ruf wrote. “I, on the other hand, did not.”
Friske’s attorney, Eric Fong, wrote in a sentencing memorandum that his client protested against some of Portmann’s tactics but was shouted down.
“Whereas in the past she was always verifying data, checking references and confirming income, Mr. Portmann demanded the loans close by any means,” Fong wrote.
Reding’s attorney, Keith MacFie, said his client has suffered immensely for her working relationship with Portmann.
“Her conviction for bank fraud will make her unemployable in most positions of trust,” MacFie wrote in court documents. “She is already being treated for depression, insomnia and anxiety disorder.”Adam Lynn: 253-597-8644 adam.lynn@ thenewstribune.com blog.thenewstribune.com/crime @TNTadam