The owner of a Seattle lending business, Hoss Mortgage Investors, was sentenced on Friday, Oct. 26 to eight years in prison, three years of supervised release and $4.2 million in restitution for five counts of mail fraud, announced U.S. Attorney Jenny A. Durkan.
The U.S. Attorney's office said Seattle resident Todd Hoss, 47, lied to a number of investors, including a Mercer Island family, about how their money would be used in a variety of development projects, according to a press release.
According to court records and testimony at trial, from 2007 to 2009, Todd Hoss operated Hoss Mortgage Investors (HMI). HMI extended short-term loans to commercial property developers who otherwise did not qualify for conventional bank loans. HMI funded these loans with money HOSS solicited from individual investors.
Hoss told investors that the money would be secured by specific liens on properties with appropriate reserves, when in fact there were no liens for the investors, and much of the money was used simply to pay off other investors like a ponzi scheme.
At least one Mercer Island resident, whom prosecutors declined to identify citing privacy concerns, lost approximately $150,000 in the fraud.
In April 2012, Hoss was convicted following a ten-day trial. At sentencing, U.S. District Judge Ricardo S. Martinez noted that many of the victims in the fraudulent scheme were elderly and trusted the mortgage investor because they had invested with his father.
“Your fraud is a crushing blow to these elderly victims,” Judge Martinez said. “They didn’t sign up to be sacrificed on the altar of your greed. You treated them like sheep waiting to be shorn so you could wear wool.”
Hoss lied to his investors about the security of their loans and repayment, diverting their money instead to pay for undisclosed and unauthorized business and personal expenses and to pay investors for prior, unrelated loans in the amount of more than $2 million. In some instances, he sold investors loans that simply did not exist and failed to pay back investors their principal when a loan paid off or was cancelled.
Assistant prosecutor Kathryn Kim Frierson and special prosecutor Steven Hobbs told the jury in closing arguments that “Todd Hoss was exploiting years of trust he had built up with these people, to line his own pocket with over a million dollars ... He exploited a lack of investor knowledge for his own greed.”
The case was investigated by the United States Postal Inspection Service (USPIS) and the Washington State Department of Financial Institutions.
(Ed. Note: The information above is taken from a US Attorney's Office, Western Washington District press release.)