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Felix Adamo /The Californian

In this February photo, Julie Farmer, right, the sole defendant without a plea deal in the Crisp

FRESNO — A former loan officer for the mortgage brokerage of Crisp & Cole Real Estate testified Friday that fraud defendant Julie Farmer was aware of four primary methods used by company officials to secure big home loans fraudulently.

But under cross examination, Jerald Allen Teixeira, who did work for Tower Lending, conceded he didn't know if she actually witnessed the malfeasance being done.

Teixeira described instances in which loan processors involved in the Crisp & Cole conspiracy would use "white out" to change documents banks had submitted showing how much "straw buyers" on average had in their account over a period of about 60 days.

The bank balance information was supposed to show lenders whether buyers really had the means to pay back loans and hadn't just received "miracle money."

Teixeira also described how employees provided false paperwork showing straw buyers either were self-employed or worked for at least two years at Crisp & Cole. And he detailed instances in which workers falsified signatures on paperwork when the California Department of Real Estate, now called the state Bureau of Real Estate, questioned why documents that would normally have been signed over time had all been signed on the same day.

Workers, Teixeira said, backdated paperwork to make it look like they were signed on different days.

Teixeira was testifying during the fourth day of Farmer's criminal fraud trial in U.S. District Court in Fresno.

Prosecutors have alleged Farmer was involved in directing a mortgage fraud ring led by David Crisp and Carl Cole, while Farmer has maintained she was unaware of any illegal activity and was only following orders.

Under a plea agreement compelling Teixeira to testify against Farmer, Teixeira admitted to wire fraud and is scheduled to be sentenced June 2.

Teixeira told the court Friday that he talked to Farmer about the wrongdoing and that much of it was done openly — so she had to know. Farmer has been described as the No. 3 person at Crisp & Cole.

He described one instance in which underwriters needed verification someone worked at Crisp & Cole and that "(Farmer) advised me to write what I needed" to show their employment.

He also said Farmer maintained a notebook of properties that were matched up with potential straw buyers during closed-door meetings she participated in.

During cross examination, Farmer's Fresno attorney, Tony Capozzi, elicited statements by Teixeira that he had handled about 30 fraudulent loans and the average loan amount was about $400,000. That means he was responsible for about $12 million worth of fraud.

And yet, Capozzi pointed out, Teixeira is only facing punishment for about $2.5 million in bank losses. Capozzi was suggesting Teixeira testified to whatever would get him a lighter sentence.

In response, Teixeira said not all the fraudulent loans he handled translated into losses for banks — in essence, banks didn't necessarily lose $12 million.

Teixeira had told U.S. Attorney Chris Baker on the witness stand that he was testifying "to do the right thing in exchange for some benefit."

Capozzi also got Teixeira to concede Farmer didn't actually supervise his work — she only asked for status reports — and that Farmer did not examine loan applications for truthfulness.

Teixeira admitted he didn't tell Farmer when "white outs" would happen.

Earlier in the day, Teixeira said Farmer was "incredibly well-organized, detail-oriented."

He said Farmer stayed on top of her work and that of others, including gathering updates on business activity and reporting them to her bosses, who were Crisp and Cole.

Farmer faces charges of conspiracy to commit mail, wire and bank fraud, six counts of mail fraud, four counts of wire fraud and one count of conspiracy to commit money laundering.

She is the only one of 15 Crisp & Cole defendants to take her case to trial. Crisp and Cole have been sentenced to 17 1/2 years in federal prison for their roles in the conspiracy, which prosecutors say involved having straw buyers obtain home loans fraudulently and then selling the properties multiple times at inflated prices and skimming off the “equity.”

Many of the properties went into foreclosure.

The trial is scheduled to resume Tuesday morning.