LAWFUEL – Law News Network – An Orange County man who ran Mortgage Capital Resource Corporation (MCR) has pleaded guilty to federal wire fraud and money laundering charges related to a scheme that cost lenders more than $9 million.
Kenneth Christopher Ketner, 57, of Newport Beach, pleaded guilty to the two felony counts late Tuesday in federal court in Santa Ana.
The second defendant in the case, attorney Allen Johnson, 59, also of Newport Beach, pleaded guilty last year to wire fraud and money laundering for participating in Ketner’s scheme.
Drawing on lines of credit from commercial lenders, Ketner and MCR purported to fund home loans for borrowers throughout the country. Rather than using the commercial lenders’ money to fund mortgages as promised, Ketner, with Johnson’s help, diverted the money for his own use. Ketner used the money to operate MCR and to pay personal expenses, such as car, credit card and boat payments.
To conceal that he had misappropriated this money, Ketner caused MCR to find new loans that lenders would agree to fund. Ketner then caused the money earmarked for these new loans to pay off the original borrowers whose funds he had misappropriated, thereby keeping the scheme alive.
Ketner pleaded guilty before United States District Judge James V. Selna, who is scheduled to sentence the defendant on December 4.The charges of wire fraud and money laundering carry a maximum possible penalty of 15 years in federal prison, but a plea agreement in the case contemplates a sentence of approximately five years.
Johnson is scheduled to be sentenced by Judge Selna in early 2007.
This case is the result of an investigation by the FBI and IRS-Criminal Investigation Division.
CONTACT: Assistant United States Attorney Brent G. Tabacchi
Assistant United States Attorney Kenneth B. Julian
Release No. 06-104