18 February 2005 – LAWFUEL – The Law News Network – The former CEO of Mortgage Capital Resources was arrested this morning on various federal charges related to a scheme to defraud lenders out of more than $9 million and then to launder some of the funds through off-shore accounts.
Kenneth Christopher Ketner, 57, or Newport Beach, was named in a 14-count indictment returned yesterday by a federal grand jury in Santa Ana.
The grand jury also indicted attorney Allen Johnson, 59, also of Newport Beach, on six counts of wire fraud and one count of conspiracy to launder money.
The indictment alleges that Ketner, the owner and CEO of Mortgage Capital Resources (MCR), entered into lending agreements with various financial institutions that allowed MCR to originate loans on their behalf. The lenders would wire the loan proceeds to a closing agent who was supposed to complete the transaction by disbursing the funds directly to the borrowers. Ketner had the lenders send the loan money for MCR to Johnson, an attorney and longtime friend of Ketner. Johnson would then wire the money to MCR where Ketner would direct the money into uses other than to fund loans. For example, the indictment alleges that Ketner misdirected lenders’ funds to Ferrari of Orange County to help pay for a new $244,000 Ferrari.
The indictment also alleges that Ketner and Johnson took some of the proceeds of this fraud and laundered it through banks in Nevis and Luxembourg. Ketner and Johnson set up bank accounts using a fake identification in Nevada and had their money wired to these accounts from which they would withdraw the money.
In total, the indictment alleges that the lenders suffered more than $9 million in losses.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
Ketner and Johnson, who will be summoned to appear in court, are expected to be arraigned on the indictment on February 22. If convicted of the 14 counts in the indictment, Ketner faces a statutory maximum sentence of 105 years in federal prison. Johnson, if convicted on all seven counts, faces a maximum of 40 years in prison.
This case is the result of an investigation by the FBI and IRS-Criminal Investigation Division.
CONTACT: Assistant United States Attorney Andrew Stolper
Release No. 05-035