Local Woman Sentenced and Ordered to Pay $1.8 Million for Complex Fraud Scheme
Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413
NEWS RELEASE SUMMARY – January 30, 2017
SAN DIEGO – Deborah Tumlinson of Valley Center was sentenced yesterday to a year and a day in custody for her participation in a fraudulent scheme devised after the 2007 Witch Creek Wildfire. U.S. District Judge Janis L. Sammartino also ordered Tumlinson to pay restitution in the amount of $1,838.742.24.
On May 13, 2016, Tumlinson pleaded guilty to a wire fraud scheme that ran from May 2010 to April 2013. Part of the scheme involved obtaining loan proceeds from U.S. Claims (Lifeline Funding, LLC), a funding company based in Moorestown, New Jersey that provides loans for individuals who can use expected or actual lawsuit proceeds as collateral. To obtain a loan from U.S. Claims in the amount of $750,000, Tumlinson made false representations, and caused others to do the same.
On May 20, 2010, Tumlinson caused her attorney, Carter Johnston, to send a letter to her real estate broker, which misrepresented that Tumlinson and her husband had reached a settlement in their pending lawsuit against SDG&E. The lawsuit (Edward Malone, et al. v. SDG&E, et al., Case No. 37-2008-00081779-CU-PO-CTL in San Diego Superior Court) was based on allegations that the Tumlinsons’ former residence in Ramona, California, was damaged by the Witch Creek Wildfire on October 21, 2007. Tumlinson caused Johnston to send a second letter to her real estate agent on September 30, 2010, which misrepresented that the Tumlinsons had obtained funding for the purchase of a new residence in Valley Center, California. Mr. Johnston has since been disbarred by the State of California.
On October 2, 2010, Tumlinson caused Johnston to send a letter to U.S. Claims, misrepresenting that the Tumlinsons had settled the SDG&E lawsuit for $2,490,000. Three days later, Tumlinson falsely told U.S. Claims that a court-appointed mediator in the SDG&E lawsuit had already awarded $2.4 million to the Tumlinsons. The next day, the Tumlinsons signed a Purchase Agreement in support of a U.S. Claims loan application. The Purchase Agreement falsely provided that Johnston represented the Tumlinsons in connection with their “settled claim” in the SDG&E lawsuit when, in fact, they were represented at that time by other attorneys, and no settlement had been obtained which could be used as collateral to secure the U.S. Claims loan. The Tumlinsons received a loan from U.S. Claims in the amount of $750,000, which they never repaid.
After receiving the loan proceeds from U.S. Claims, Tumlinson wire-transferred $550,000 into escrow on October 8, 2010, for the purchase of the Valley Center property. Using the equity from the Valley Center property, Tumlinson sought a new loan from Seaside Funding Inc., a mortgage broker, based in Carlsbad, California. In December 2010, Tumlinson signed, and caused her husband to sign, Seaside Funding loan documents for a $250,000 home-equity loan. The application and supporting documents falsely represented that the Tumlinsons did not intend to live in the Valley Center property as their primary residence, and that it would be used as a rental property that generated income necessary to make loan payments. As a result of the misrepresentations, Seaside Funding funded the requested loan, which the Tumlinsons never repaid. The loan proceeds were later recovered when Seaside Funding foreclosed on the Valley Center property.
At sentencing, Judge Sammartino noted that Tumlinson’s property did receive some damage from the 2007 fire, but that her subsequent actions made her “pain and anguish spread to others.”
“The defendant suffered losses during a terrible wildfire, like many others did,” said Acting U.S. Attorney Alana W. Robinson. “But she exploited her own tragedy and the compassion of others, and in the process made sure it became someone else’s tragedy, too. The people she fleeced paid a high price, and for that, she will pay a high price.”
Special Agent in Charge Eric S. Birnbaum said, “The San Diego Division of the FBI remains committed to uncovering these complex fraud schemes and bringing those to justice who would attempt to cheat the banking system for personal gain.”
DEFENDANT Case Number: 14CR2978-JLS
Deborah Tumlinson Age: 55
SUMMARY OF CHARGE
Title 18, United States Code, Section 1343 (Wire Fraud Scheme)
Maximum penalty: 20 years of custody; $100,000 Fine
Federal Bureau of Investigation