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July 29, 2009

CLEAR LAKE MORTGAGE BROKER/REAL ESTATE DEVELOPER SENTENCED TO 10 YEAR PRISON TERM

(HOUSTON, Texas) - Richard Bell, 50, president and CEO of Harborside Mortgage Corporation, was sentenced to 121 months in prison late yesterday by U.S. District Judge Gray Miller for bank fraud and money laundering, United States Attorney Tim Johnson announced today.

Following a lengthy hearing, U.S. District Court Judge Gray Miller sentenced Bell to 121 months in federal prison without parole. During the seven-hour long hearing, Bell stipulated that his conduct charged in the indictment and other relevant conduct caused actual losses of $1.6 million dollars. Several victims of Bell’s fraud attended the proceeding and, although Bell contested their status as “victims,” two provided victim impact statements to the court. The court held Bell responsible for defrauding First National Bank as further described below, Wachovia Bank, Compass Bank, Hibernia Bank, Wells Fargo and at least two individuals. After finding that Bell’s criminal history and the final sentencing guideline score did not adequately address the seriousness of his offense, the court departed upward from the recommended sentencing guideline range and handed down the 10-year and one month prison term to be followed by a five-year-term of supervised release. Bell has also been ordered to pay restitution to his victims in an amount to be determined within 90 days.

According to the superseding indictment and the plea agreement, Bell entered into a contract to purchase 97 acres of land in Rosharon, Texas, in 2005 for approximately $1.1 million. The contract specified Bell would make a earnest money down payment of $385,000 and obtain a loan for the balance of the purchase price. Bell made application to First National Bank for a loan of $720,000. As part of the loan application package, Bell submitted false and fraudulent documents, including false financial statements, false income tax returns and copies of false and fraudulent cashier’s checks as proof of the $385,000 down payment. Based on the application and the supporting documentation supplied by Bell, First National Bank funded the loan.

The cashier’s checks totaling $385,000 were in reality two money orders obtained from Wells Fargo Bank with a true value of $35.00. According to Wells Fargo Bank records, Bell purchased a $25 money order Nov. 8, 2005, and a $10 money order Dec. 9, 2005. The money orders were altered using an optical scanner and computer software to make them appear to be cashier’s checks in the amount of $135,000 and $250,000. The settlement statement for the closing of the sale of the property was signed by Bell and the seller and reflected that the cash down payment of $385,000 was “held by seller.” On Dec. 15, 2005, $676,000.84 from the proceeds of the First National Bank loan were wire transferred to the seller of the property.

The factual basis in the plea agreement also included details of an unsecured $100,000 line of credit obtained by Bell from First National Bank Jan. 13, 2006, that was obtained using false and fraudulent tax returns and financial statements. By Jan. 19, 2006, Bell had withdrawn more than $50,000 against the line of credit via checks payable to himself, Harborside Mortgage and Custom Design Pools.

The matter was investigated by the FBI and the Criminal Investigation Division of the Internal Revenue Service. The case was prosecuted by Assistant U.S. Attorneys Belinda Beek and James R. Buchanan.

 

 

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