FRESNO — His son received leniency, but disgraced real estate executive Carlyle “Carl” Lee Cole was sentenced Monday to 17 1/2 years behind bars — the full term recommended by prosecutors — for participating in Bakersfield’s most notorious mortgage fraud conspiracy.
The sentences reflected what U.S. District Judge Lawrence J. O’Neill called a “tragedy at all levels.” He described the situation as a hard-working son being lured into his father’s “egregious, planned, white-collar heist.”
O’Neill briefly scolded Carl Cole before having him taken into custody, saying that beyond stealing “in enormous, big ways from the community,” the 66-year-old former high school principal had brought other people into his crime “including your son, who now has a felony conviction.” He acknowledged Cole might serve the rest of his life in prison.
The six-month sentence given to Cole’s son Caleb is just short enough to allow him to keep his job as a biologist at the Kern County Agricultural Commissioner’s office. O’Neill said that was no coincidence.
While the mail fraud Caleb Cole pleaded guilty to was not excusable, O’Neill said, it was at least “understandable” in that his father had asked him to do it.
“In my looking at your life, it has been exemplary” until the moment Caleb signed a fraudulent loan application stating he intended to live in the home he was buying, O’Neill said.
“I think that to crush you with a sentence that would get you fired certainly does not serve the society in which you live,” the judge said.
Carl Cole certainly would have received a longer sentence if his son had not agreed to plead guilty, Caleb’s defense attorney, Jeff Hammerschmidt, said at a news conference following Monday’s proceedings at the federal district courthouse in Fresno.
“Caleb still very much loves his father,” Hammerschmidt said.
Caleb, 37, told reporters it was hard seeing his father being sent to prison, and that “it’s fairly scary” realizing that he is scheduled to do the same April 21. He will serve his sentence at Taft Community Correctional Facility.
With his lips tightly pursed, Caleb let a long pause pass before answering a reporter’s question about whether he blames his father for letting him get caught up in the mortgage scheme.
“There’s not much to say, really,” he said.
Carl Cole declined to take a reporter’s questions before entering the courthouse Monday, other than to say he was doing as well as could be expected under the circumstances.
When the judge read his son’s sentence, Carl Cole bowed his head, lifted fingers to a temple and shut his eyes tightly, saying nothing to his wife and other son as they sat together in the back of the courtroom.
A short time later, after his own sentencing, Cole tilted his head back slightly and sat on a bench in silence waiting to be handcuffed and led from the courthouse. It was unclear where he will serve his time.
Father and son pleaded guilty Nov. 7 in mutually contingent deals with federal prosecutors. Carl Cole admitted to mail fraud, wire fraud and bank fraud, and Caleb to mail fraud. Under the deals, the father faced a maximum sentence of 30 years in prison and a $1 million fine, and Caleb faced a maximum of 20 years and a $250,000 fine.
On Monday, Carl Cole was ordered to pay $28.5 million in restitution, and Caleb $663,950. No fines were imposed other than a $100 court fee each. Asked how he would repay the restitution, Caleb told reporters, “that’s a good question.”
Carl Cole’s business partner, David Marshall Crisp, pleaded guilty Dec. 16 to the same set of crimes. Crisp and his wife, Jennifer Anne Crisp, who has pleaded guilty to one count each of mail and wire fraud, are scheduled to be sentenced March 31.
Prosecutors essentially accused David Crisp and Carl Cole of setting up and carrying out a $30 million mortgage fraud scheme that shocked Bakersfield and forced foreclosures throughout the city.
A total of 15 defendants are alleged to have participated in the conspiracy to defraud mortgage lenders by using “straw buyers” — including Caleb Cole — to buy homes at inflated prices using almost entirely borrowed money.
Prosecutors say the homes were resold to new straw buyers at ever-higher prices in order to extract the equity that had built up on paper. Ultimately, most of the properties entered foreclosure as the group was unable to keep up with loan payments.
The only defendant who has not taken a plea agreement is Julie Dianne Farmer, former operations manager of the firm at the center of the case, Crisp & Cole Real Estate. She is charged with eight counts of mail fraud, four counts of wire fraud, one count of conspiracy to commit mail, wire and bank fraud, one count of conspiracy to launder money and one count of bank fraud.
Farmer’s lawyer says his client does not deny participating in the scheme but that she did not know at the time that her actions violated the law. Her trial is scheduled to begin April 8 in Fresno.