Pierce County lender Kandi gets 5 years for mortgage fraud

The dichotomy that is Emiel Kandi was on display Wednesday at his sentencing hearing in U.S. District Court in Tacoma.

There was the cunning businessman who either tricked, pressured or cajoled people into signing fraudulent real estate loan applications, the man assistant U.S. Attorney Brian Werner said “took advantage of people who were down on their luck.”

Kandi, who once described himself to The Seattle Times as a “wolf” for his hardball lending tactics, pleaded guilty earlier this year to lying on federal loan applications and conspiring to submit fraudulent mortgage applications.

The crimes cost the federal Department of Housing and Urban development more than $830,000 in taxes and fees.

But in court there also was the generous benefactor who gives freely to local charities and makes the people in his social circles feel special.

“I know he has been painted as unscrupulous in business, but my opinion is that he has a heart of gold buried deep inside,” Dr. Richard Bowe of Gig Harbor wrote in one of the nearly 30 letters submitted to the court in support of Kandi.

In the end, Judge Ronald Leighton acknowledged Kandi’s positive attributes but said his actions in 2008 and 2009 were akin to those of “a predator,” and sentenced the University Place man to five years in prison.

“Mr. Kandi has many good qualities,” the judge said. “But the compelling theme of his life to this point was he was aggressive, he was pushing the envelope, he was a risk taker. Without humility, without empathy, those qualities are the ruination of someone.”

Federal prosecutors said in court documents that Kandi submitted false information on at least 19 home mortgage loan applications for properties in Gig Harbor, Puyallup, Kent and Vancouver, Wash.

He was accused of lying about borrowers’ employment history, income and other information to help them secure federally insured loans.

For his efforts, he charged exorbitant fees, sometimes as much as $35,000 per application, Werner told Leighton in requesting a high-end sentence. Some of the people who signed the loans were unaware of the fees, the assistant U.S. Attorney said.

“Mr. Kandi is someone who deceives,” Werner said. “He did so to line his own pockets.”

One of Kandi’s two attorneys, Ron Ness, disputed that. He told Leighton the borrowers knew or should have known what they were signing.

He also said his client cooperated with the government once he was charged, giving information on other potential wrongdoing in the local real estate financial arena.

James Schoenberger, who also represented Kandi, argued that much bigger fish than Kandi, including executives at big lenders such as Countrywide and Bank of America, escaped criminal prosecution for similar actions.

“The government wants to make an example of Emiel,” Schoenberger said. “Sending Emiel to prison accomplishes nothing.”

The attorney recommended probation, home detention and community service.

Kandi declined to make a statement in court.

Leighton got the last word.

He acknowledged that some people got off easy during the real estate meltdown that plunged the U.S. economy into recession and many people into foreclosure.

“It is regrettable that we accommodated the financial institutions because of their importance,” the judge said. “It sickens me. But that is not before us here.”

Kandi “took advantage of the situation,” Leighton said. “Mr. Kandi was a predator.”

The judge then gave Kandi 60 months, which was nine months more than the low end of the sentencing range but three months shy of the high end.

Leighton also ordered Kandi to pay more than $831,000 in restitution to the U.S. government.

In a move Kandi likely would never have considered, Leighton waived the interest on that debt.

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