Pair guilty in realty scam
A Spokane mortgage company owner and a real estate agent were convicted Wednesday by a U.S. District Court jury of conspiring to defraud young and vulnerable home buyers and lenders in an extensive fraud scheme.
Dale D. “Sage” Gibbons, co-owner of the defunct Century Mortgage, and Sally L. Gibson, a Spokane Realtor who worked with him, were convicted of conspiracy and multiple counts of wire fraud.
The scheme involved a widely advertised sales pitch promising potential buyers in the Spokane region $100 if Century Mortgage couldn’t find and qualify them to buy a home.
Behind that pitch, the jury was told, there was an elaborate mortgage fraud scheme that cost lenders $1.4 million.
The scheme also put many first-time home buyers and others with bad credit in “upside-down” positions – owing more for mortgages than their homes were worth. Some victims were forced to consider bankruptcy after being caught up in the scheme.
It lasted from July 1997 through November 2000 and was a financial windfall for Realtors, appraisers and the mortgage company executives involved in the home-selling, mortgage fraud conspiracy, the jury was told.
After the guilty verdicts Wednesday afternoon, the case took another unusual twist.
U.S. District Court Judge Robert Whaley ordered the 12-member jury that convicted the pair to remain impaneled to consider if aspects of the case warrant more severe sentences.
The judge said he was taking the unusual step – perhaps the first of its kind – in light of a June 24 U.S. Supreme Court ruling known as the Blakely decision.
In ruling in a Washington state case involving accused kidnapper Ralph Howard Blakely Jr., the nation’s highest court said only a jury can determine beyond a reasonable doubt all facts legally essential to a defendant’s sentence.
Now, the jury that convicted Gibbons and Gibson will review the number of participants in the conspiracy, the leadership role of the defendants, the amount of money lost, the vulnerability of the victims, and other criteria routinely reviewed by a federal judge before sentencing.
They will remain free until sentencing.
Gibbons, Gibson and three other co-conspirators, Ronald Lee Burger, Cathy M. Patrick and John T. Hansen, were indicted last August after a two-year investigation by FBI agents based in Spokane.
The FBI investigation revealed the defendants tricked mortgage lenders by drafting phony documents, including fraudulent “gifting letters” suggesting the buyers were either being given or inheriting funds.
The scheme also involved exaggerated appraisals of homes that misled out-of-state lenders and falsified down-payment documents.
Burger, Patrick and Hansen avoided trial by striking plea bargains in the hopes of getting lighter sentences. They each await sentencing before Whaley.
Burger and Patrick were both called as prosecution witnesses and testified against their former business associates, Gibbons and Gibson.
The trial started on June 30 and resumed on Monday after brief breaks necessitated by other court business.
The prosecution, handled by Assistant U.S. Attorney George Jacobs, involved 410 exhibits and 62 government witnesses.
Gibbons was convicted of conspiracy and 15 separate counts of wire fraud. He testified in his own defense and told the jury he didn’t intentionally break the law and was only doing what he was told by lenders.
Gibson, who didn’t take the witness stand, was convicted of conspiracy and 11 separate counts of wire fraud.
Near the end of the trial, Gibson attempted unsuccessfully to fire her lawyer, Byron Powell, and acted as her own attorney in filing multiple motions, all of which were denied by the court.