Crisp in-laws admit to wire fraud
| Thursday, Jan 07 2010 12:13 PM
Last Updated Friday, Jan 08 2010 10:39 AM
Images
800 Astoria Park Drive - This house at 800 Astoria Park Drive is named in the federal charging document filed against Leslie Sluga. She took out a pair of loans totaling about $374,000 against the property in October 2005 but intentionally failed to disclose existing mortgages on other properties. The house, which has since been foreclosed on, was among three Sluga purchased at the direction of a Crisp & Cole principal that ultimately defrauded lenders of $912,000, prosecutors allege.
11402 Marazion Hill Court
Kevin and Leslie Sluga's daughter, Megan Balod, borrowed more than $760,000 against this house at 11402 Marazion Hill Court in May 2006. Plea agreements indicate that Megan Balod will plead guilty to criminal charges. The federal charges against Kevin Sluga, an accountant, allege he created many falsified letters verifying employment information for loan applications, but loans against this home and one other are the only specified counts in the document.
11219 Draper Court
Kevin and Leslie Sluga's daughter, Jennifer Crisp, borrowed nearly $1.3 million against this 11219 Draper Court home in September 2006. Federal prosecutors included the loans in charging papers filed against her father, an accountant, in Fresno district court this week. The U.S. Attorney's office allege Kevin Sluga defrauded lenders of nearly $4 million by creating fake letters verifying employment in mortgage applications totaling $12.6 million.
The father- and mother-in-law of disgraced former Bakersfield Realtor David Crisp have signed plea agreements with federal prosecutors admitting they are guilty of felony wire fraud and other charges, court documents available Thursday evening show.
The memoranda filed in Fresno district court show that a package deal with accountant Kevin Sluga, 60, and his wife, Leslie Sluga, 57, also depends on a guilty plea from their daughter Megan Balod, 31.
The Slugas’ other daughter, Jennifer Crisp, 28, the wife of David Crisp, is not included in the package offer. She has not been charged with any crimes.
Kevin and Leslie Sluga have a scheduled court appearance at 10 a.m. Friday in Fresno to plead in the case, according to the U.S. Attorney’s office, which filed charges against them late Wednesday.
Each could face up to 20 years in prison and fines up to $250,000, although the documents describing the deal say prosecutors will ask for reduced sentences if the couple complies with all aspects of the agreement.
The Slugas declined repeated requests for an interview but issued a statement through their attorney, George Buehler.
“We have cooperated with the authorities and pursuant to our plea agreements will continue to do so,” they said. “We come forward today to take responsibility for our errors and accept the consequences of our actions. We want to publicly thank our family and friends for their support, and our church for guidance and wisdom during this trying time in our lives.”
Kevin Sluga signed a plea agreement Dec. 22; his wife signed one Monday. Federal prosecutors signed both memos Thursday. Both are charged with felony wire fraud and aiding and abetting.
Balod’s plea agreement has not yet appeared in online court filings, nor have any charges against her.
The Slugas are now the second and third defendants in a federal case related to operations of the former Crisp, Cole & Associates, better known to locals as Crisp & Cole Real Estate. Former employee Jerald Teixeira pleaded guilty in September to criminal charges of wire fraud and agreed to cooperate with authorities.
The company, owned by Crisp, 30, and then-managing broker Carl Cole, 62, aggressively broke into Bakersfield’s real estate scene during the boom with an flashy presence adorned with high-end accoutrements. As the market ebbed, the principals’ practice of flipping homes among Crisp & Cole’s staff, family members and associates led to a string of failed loans totaling some $83 million on more than 140 local properties, according to records tracked by The Californian for more than a year.
FBI and IRS agents raided 13 local sites associated with the business, including the Slugas’ home, more than two years ago. Licenses of Crisp and Cole have since been revoked.
Federal prosecutors allege Kevin Sluga, through his Bakersfield firm California Business Solutions (later called Comprehensive Business Solutions), knowingly created fraudulent letters verifying employment in mortgage applications related to Crisp & Cole. The so-called “comfort letters” contained false job information and landlord experience. Some even listed bogus jobs at Sluga’s firm.
The letters were used by Crisp, Cole and their employees at the real estate firm and at Tower Lending, the loan arm of Crisp & Cole, to buy properties through “straw buyers and other illegal means,” Kevin Sluga’s plea agreement says.
The fake CPA letters, issued between January 2005 and January 2007, were used to buy more than $12.6 million worth of property that defrauded lenders of nearly $4 million.
Sluga’s company provided corporate tax and accounting services to Crisp & Cole Real Estate. It also prepared tax returns for David Crisp, Carl Cole, Sluga’s daughters and several key employees, the plea agreement says.
Neither Cole nor Crisp returned messages seeking comment Thursday.
While Kevin Sluga admits to widespread use of the fake CPA letters in his plea agreement, only two properties are listed in the four counts against him. Both involved loans taken out by his daughters.
Balod, 31, took out loans totaling about $760,000 against 11402 Marazion Hill Court in May 2006.
Jennifer Crisp, 28, borrowed nearly $1.3 million against 11219 Draper Court in September that year. Both homes were later foreclosed on.
In his plea, Sluga agreed to pay full restitution and not to attempt discharging the obligation through bankruptcy.
The California Board of Accountancy, a state agency that licenses and regulates accountants, said it could not comment on the case nor on whether any investigations are pending on Kevin Sluga’s license.
A state spokeswoman described how the process works in general.
“In most cases where you have criminal charges, whether it’s the U.S. Attorney or the California Attorney General, we may get a call letting us know and that is reason enough for us to initiate an investigation,” said spokeswoman Lauren Hersh. “But we don’t want to jeopardize a criminal case just to take away a license, so we’ll usually hang back a little and let law enforcement do its work.”
Once there’s a conviction, the license holder is required to notify the state within 30 days. That may lead to a license suspension.
Leslie Sluga, between October 2004 and January 2007, bought three homes totaling about $2.5 million “at the direction of” David Crisp, her plea agreement indicates.
To get the mortgages she made false statements about her employer, income and outstanding liabilities and also claimed some would be owner-occupied houses, which typically get better loan terms. Employees at Crisp & Cole Real Estate as well as Tower Lending knew the information was false, her plea agreement says.
One loan application from October 2005, $374,000 for 800 Astoria Park Drive, is named in the filings. Sluga admits in the plea she knowingly, and with intent to defraud, failed to list loans she had out on other properties at the time. The home was later foreclosed on.
Leslie Sluga’s actions defrauded lenders of $912,000 in all, prosecutors say.
In addition to wire fraud charges, the Slugas also face counts of aiding and abetting.
Defrauded lenders named in the plea agreements include the former Fremont Investment & Loan; the company’s post-bankruptcy successor has filed a massive civil suit against Crisp & Cole.
Another, the now-defunct Long Beach Mortgage Co.,, was the subprime arm of failed savings and loan Washington Mutual. Aegis Wholesale Corp. later filed for bankruptcy. SunTrust Mortgage Inc. is still operating.
