Jeffrey Sprague, 50, Bend, Oregon, appeared before Chief U.S. District Court Judge Ann Aiken and pleaded guilty to conspiracy to make false statements to a financial institution, to commit wire fraud, and to commit bank fraud. The charge arose out of the collapse of Desert Sun Development (DSD), a development and construction company in Bend, Oregon.
As part of his guilty plea, Sprague admitted that he caused his former employer, West Coast Bank, to lose more than $2.6 million on fraudulent loans.
According to court documents, Sprague, a loan officer at West Coast Bank at the time, falsified loan applications for DSD employees and others by fraudulently inflating their monthly income and falsely claiming that these homes were going to be the employees’ primary residences when he knew these homes were part of DSD’s flipping scheme. Sprague also knew that these loan files contained forged or scanned signatures and other material misrepresentations and omissions. West Coast Bank approved and funded the loans for DSD employees and others based on the loan applications Sprague falsified as well as the other documents that Sprague submitted to the bank that he knew were false.
Out of the DSD investigation, 13 individuals were charged in five indictments, and, with Sprague’s guilty plea, all 13 defendants have pled guilty. Sprague is scheduled to appear before Chief Judge Aiken for sentencing on September 3, 2013. Sentencing hearings for the co-defendants are scheduled for July 10 and July 31, 2013, before Chief Judge Aiken.
Conspiracy carries a maximum sentence of five years in prison and a $250,000 fine.
This case was investigated by the FBI, IRS-Criminal Investigations, and the Oregon Division of Finance and Corporate Securities. Assistant U.S. Attorney Scott E. Bradford is handling the prosecution of the case.