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Henry A. Barrios / The Californian

Julie Farmer, third from left, arrives at the U.S. District Court in Fresno Wednesday morning with her husband, Charles Farmer, right, and attorney Anthony Capozzi, far left, and other family members for her trial in the Crisp

FRESNO — Defense attorneys for Bakersfield mortgage fraud defendant Julie Farmer rested their case Thursday following hours of intense testimony by the former Crisp & Cole Real Estate office manager, including her brief but dramatic breakdown under withering cross-examination by the lead federal prosecutor.

Into the early afternoon, Farmer coolly refuted a wide swath of the testimony delivered by prosecution witnesses. Answers she gave her Bakersfield lawyer painted a picture of her as an innocent administrative assistant with no knowledge of the malfeasance going on around her.

But when Assistant U.S. Attorney Kirk Sherriff began questioning her, which he did for almost three hours straight starting about 1:30 p.m., Farmer looked at times bewildered and distressed. She shrugged and glanced nervously at her attorneys as she struggled to recall conversations, email correspondence and financial transactions that took place between 2005 and 2007.

Emotion overcame her 45 minutes into the cross-examination when Sherriff pressed her to explain why she had deposited $22,000 into the personal account of a company receptionist who Farmer said she knew was involved in a “joint venture” home purchase. Prosecutors have characterized such arrangements, where the company became the actual owner, as fraudulent “straw buyer” transactions that ultimately cost banks nearly $30 million.

Farmer testified that she knew the nominal buyer, Janie Stockton, had little income. But she suddenly lost composure when Sherriff prodded her for an explanation for the deposit.

“I don’t know how to answer you,” she said, sobbing.

Farmer soon regained her composure, sat up straight, and told Sherriff she did not know whether it was her or her boss, company co-owner David Crisp, who ordered the subsequent “verification of deposit” documenting the money in Stockton’s account. (Such documents are used in certain types of lending programs to establish that the borrower has sufficient assets to qualify for a home loan.)

Prosecutors allege Farmer helped orchestrate a mortgage fraud ring led by Crisp and Carl Cole in which the conspirators used straw buyers to secure home loans fraudulently, flipped the properties multiple times at ever-higher prices and extracted the equity.

Farmer has steadfastly denied being part of the fraud, saying she was unaware of it and had no part in it. Crisp and Cole both took plea deals with the U.S. Attorney’s Office, pleading guilty to conspiracy to commit mail, wire and bank fraud. Both just began serving 17 1/2-year federal prison sentences.

Farmer is charged with 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.

Some of the charges carry maximum penalties of 20 years in prison and a $1 million fine.

Several times Thursday, the second day of the defense’s case, Farmer backpedaled or acknowledged providing false information on mortgage loan applications under Sherriff’s cross-examination.

Farmer conceded at one point she had failed to disclose on a loan application that Crisp was a “silent partner” on a property purchased by her and her husband, Charles. She later testified she didn’t see anything wrong with such an arrangement, a point Sherriff disputed.

She also acknowledged vastly inflating her income and her husband’s on a loan agreement the couple signed, overstating her length of employment with the company as well as withholding the fact the couple was about to purchase another property, a fact that could have disqualified their loan application.

Sherriff quizzed her about the time she added one of the company’s “joint partner” homebuyers to her personal savings account. The move allowed the borrower to secure a sizeable, but very misleading, verification of deposit.

Farmer testified that she didn’t have anything to do with that loan and so she didn’t ask the loan officer on the purchase why he wanted her to add the homebuyer to her account.

“I didn’t think it was wrong,” she said.

A lack of legal understanding and real estate experience was her defense in several cases. Under questioning by her lawyer, Scott Howry, Farmer said she didn't think there was anything wrong with buying and selling homes among Crisp & Cole employees, and that no one inside or outside the company had told her what was going on there was improper.

Under questioning by Sherriff, Farmer was also shown a copy of the resume she used to apply for work after Crisp & Cole’s 2007 financial collapse. It stated, contrary to her earlier testimony, that she managed a team of 45 people, including real estate agents and lenders, and that she had leadership on strategic and tactical operations for the company.

Farmer explained that she had based the resume’s wording on a document provided her by someone else. Later, under questioning by her own lawyer, she said she regretted embracing an employer she did not know had committed mortgage fraud.

Things were different for Farmer in the morning, during direct questioning by Howry.

Farmer directly contradicted statements made by Christopher Lance Stovall and Jerald Teixeira, loan officers with Tower Lending, Crisp & Cole’s mortgage arm.

She denied telling Teixeira she didn’t blame him for quitting his job at Tower because, as he testified last week, she “wouldn’t sign that stuff (falsified loan applications), either.”

“I don’t know what he was talking about,” she said of Teixeira’s testimony.

She also denied having been in on closed-door meetings at which Stovall said he, Farmer, Crisp and Cole allegedly discussed straw purchases at the heart of the government’s fraud allegations.

“I don’t remember closed-door meetings,” she said.

Farmer expressed surprise at the fraudulent activity other defendants have admitted to, including false loan deposits, unfounded income statements and falsified loan applications.

Howry took her though a list of properties prosecutors have referred to as evidence of her participation in the criminal scheme or knowledge of it. With the exception of transactions she and her husband had purchased for personal use, she denied having negotiated the deals or profiting from them.

In the case of a vacant lot she and her husband bought in Seven Oaks, Farmer said she didn’t know until years later that information on the loan application had been falsified to show her income was more than it was or that she had some $300,000 in the bank — a sum she said the couple never had on deposit.

Farmer spoke in detail about a Shaver Lake vacation home the Farmers purchased with Crisp on a 50-50 basis. Nothing about the deal appeared unseemly to her, she said, including Crisp’s agreement to pay half the mortgage amount. She noted Crisp ended up using the house, as she and her husband did on vacations, and it was never rented out as an income property.

Howry showed two pieces of evidence suggesting her good intentions with regard to the property: a “joint venture” agreement with Crisp she had drawn up based on a document she had looked up online, and an agreement with a Shaver Lake real estate agent to market the property for six months.

The property ended up being sold to another Crisp & Cole employee, Jeriel Salinas, in a deal prosecutors say was one of many straw buys. Ninety-nine percent of the sales proceeds went to Crisp — another arrangement with which Farmer said she saw nothing wrong. The house ended up in foreclosure after the firm’s financial collapse.

In general, she said she was unaware of the deals Crisp put together, saying her online course as a real estate agent had not taught her about the impropriety of straw buys or other aspects of loan fraud.

“I was kind of (on) a need-to-know basis, so (Crisp) told me what he thought I needed to know,” she said.

Earlier Thursday, Farmer testified she was not an owner at Crisp & Cole and didn’t receive any of its profits. She said was making a base pay of $900 every two weeks — about $11.25 per hour — but later earned bonuses on all closed real estate transactions and loans.

“I didn’t make decisions,” she said. “I ordered paper.”

She said she trusted her bosses, Crisp and Cole, and believed what they asked her to do was OK.

Farmer’s mother, an evangelical missionary in Ethiopia, also testified Thursday. One of Farmer’s lawyers asked Ethelene Reed if her daughter was honest, and she said yes.

“That’s how I raised her,” Reed told the court.

She said she believed Farmer to be truthful, and didn’t even tell white lies.

“There is no white lies,” Reed said.

One of Farmer’s former bosses at a physical therapy office she worked at for many years also testified to her honesty.

The woman said Farmer’s lawyers hadn’t asked her to testify, that she read about Farmer’s case in the newspaper and contacted the attorneys herself because she wanted to help.

Before the proceedings began Thursday morning, as her friends and family members chatted nearby, Farmer sat on a bench outside the courtroom reviewing what appeared to be notes and legal documents. She occasionally looked out silently at downtown Fresno from the seventh-story windows.

Each day, Farmer has been accompanied to court by more than a dozen supporters, nearly filling up the courtroom gallery. During this one moment, though, she was alone, clearly preparing for what would be one of the most important presentations of her life.

The trial continues Friday with final arguments and the delivery of jury instructions, after which the jury will begin deliberations.