Under the "Sphere" of Greg's Influence

 

Challenge:

 

Greg Pinneo and four others signed an Alford plea agreement to one count each of conspiracy to commit bank fraud. 

 

Specifics:        In late 1995, The FBI arrived at Greg’s office as a result of a “suspicious activities report” which was filed by a local lender.  The reason for the filing was that the lender discovered a sub-escrow in which Michael Nelson, an agent in Greg’s real estate office, had placed a second mortgage on a property without the first position lender’s knowledge or approval.  This led to an investigation by the FBI of all agents, clients and students under the “sphere of Greg’s influence,” as well as Greg himself.  In late 1996, Greg and four others were contacted by Kurt Hermans, a federal prosecutor for the western district of the United States.  At that meeting, it was laid out by the prosecutor’s office that between all those at the meeting, there were 6 times in which a second mortgage had been placed on a single family home on the same day as the first position bank loan without the first position lenders knowledge or approval.  Greg himself was charged with one of these transactions.  The purpose of the law is to ensure that the bank is recorded in first position and so, if a first and second loan are closed on the same day it is possible that the second loan could get recording numbers first and the bank, therefore, would not have their first position note-holders status.  Oddly enough, the second mortgages could have closed the very next day with absolutely no issues at all.  In each of these 6 circumstances the bank, was in fact, recorded in first position but the technicality stands. 

 

All 5 persons charged were given less than 5 hours to decide if they were going to sign a plea agreement as prepared by the federal prosecutor.  However, to effectuate the agreement, all 5 needed to agree to sign the plea.  Legal counsel was immediately called but the reality was that the prosecutor only needed to prove that the first and second were in fact signed on the same day and they would be found guilty and there was no argument from any who were being charged that this was, in fact, the case.  All charged were also advised that not signing the plea agreement would result in an extremely costly trial that would likely take upwards of two years to be resolved. 

 

It is important to note that no money had been lost.  In each of these 6 transactions, the homes had been sold and both the first and second position note holders had been cashed out and all had been paid in full.  In addition, the loan representative on each of these transactions knew about the second position mortgage being recorded on the same day and was careful to make sure that the bank was recorded in first position on each.  But again, as legal counsel pointed out, none of these details mattered as far as the federal government was concerned.

 

At the end of the deadline, all 5 parties chose to sign the plea agreement with Greg, as the broker, receiving the stiffest punishment.  Greg was fined $20,000, had his broker’s license revoked for ten years, and was sentenced to thirteen months in prison per the minimum sentencing guidelines.  There was no bond, no bail, and no restitution as all loans had already been paid off in full.  Greg was told to self-surrender which means he was able to check himself in at FCI Sheridan in Oregon at a time of his choosing.  He chose to self-surrender in May of 1997, after Mother’s Day, and was home on March 18th, 1998. 

 

Relevant Links:

 

http://community.seattletimes.nwsource.com/archive/?date=19970226&slug=2525900

 

http://cdn.shopify.com/s/files/1/0105/8762/files/NINE_AND_A_WAKE_UP.pdf?280

 

Lessons Learned:        Wow, where do we begin.  I think we could write a book on all that went along with this experience.  Much of it awful, but some of it inspiring beyond measure.  I suppose we should start with the practical lessons and a string of clichés are what most readily come to mind.  No blood, no foul.  Not true.  It’s the spirit of the law not the letter of the law that matters.  Absolutely not the case. The devil is in the details. You better believe it.  If you are in a position of responsibility you would do well to make sure the I’s are dotted, the t’s are crossed and that nothing escapes your watchful eye.

 

As the broker, Greg was responsible for not only his actions, but for the actions of those around him.  Whether a parent, a teacher, a broker or a business person, one can never take their role or their responsibilities lightly.  It seems strange that mistakes that can be boiled down to simple, flippant clichés can have such dire and devastating fallout, but whether we like it or not…they sometimes do.  And once you’re ‘in the system’ and defined by your wrongdoings, that system has no time or room to care about your personal story, the circumstances, or any other such thing.  It doesn’t matter that there were over 400 deals reviewed by the FBI and all of them were as white as the driven snow.  Six had fatal flaws and now you’re a convicted felon.  Add to that the frustrating reality that fraud means that there was an intent to deceive.  This also was never the case.  First and second position lenders where all paid in full, title and escrow and the bank’s loan rep all knew the details yet made the mistake of believing that whole, “it’s the spirit of the law that counts nonsense.  So at this point, do you let mistakes and their consequences defeat you, or do you look for the lessons to be learned and more importantly the reason that all of this happened.  I believe with my whole heart that everything happens for a reason even though you may have to really work at finding them.  I also believe with every fiber of my being that something good always comes out of something bad.

 

And what was the good in all of this?  We found the most amazing kind of good you can possibly imagine.  We found a new appreciation for Freedom and what it means.  I feel confident in saying that Freedom is the right we take most for granted.  For nearly all of us there is never a question of whether we have freedom or not, it is ours by birthright, as it should be.  But to spend an extended period of time without it bestows an incredible appreciation for this most precious of gifts.

 

But without a doubt, the single most amazing part of this experience was the unfiltered ability to see what and all the people in your life are made of.  Did those you considered to be friends turn and walk away for fear their own life and reputation would be soiled?  Did those you have given to and been there for give back in a time of need?  Did people show themselves to be strong and resolute in their convictions or did they forego a relationship with you for something less…messy.  Did they claim it was too difficult or did your hurt matter more to them than their own?  I have always known that adversity does not create character but rather it simply and beautifully reveals it.  Does difficulty make you turn and run for higher ground or do you stand strong and fast and face it with the courage of your character, your convictions and your compassion?  We were fortunate enough to see both in vivid detail.   And while the disappointment in people could darken an entire landscape, the lights that shined brightly were more than the darkness could manage.