$1.8-Million Scam Alleged : 2 County Men Named in Loan Fraud Counts

Two Orange County businessmen have been charged with felony grand theft and conspiracy in a multimillion-dollar loan fraud scheme involving five financial institutions, Ventura County authorities said.

The charges, filed by the Ventura County district attorney’s office, allege that Steven William Hughes, 34, of Laguna Niguel and Robert Otto Potter, 51, of Laguna Hills defrauded four S&Ls; and a mortgage lender of at least $1.8 million in a series of loans set up by companies the two men owned in south Orange County.

Also named in the complaint was Mark Steven Knapp, 31, of Pomona, identified as a loan manager. Warrants have been issued for Hughes, Potter and Knapp, and all three have agreed to appear for arraignment Tuesday in Ventura County Municipal Court, according to Bob Meyers, head of the major fraud unit of the Ventura County district attorney’s office.

Operated Several Businesses

Potter and Knapp could not be reached for comment. Hughes refused to discuss the charges.

During the last two years, Meyers alleged, Hughes and Potter operated several businesses in south Orange County that were involved in the fraudulent loans. The businesses, he said, included Nationwide Home Loans, Americal Mortgage Co., Intracoastal Realty and Investment Co. and the Financial Group. Potter and Hughes also operate Saddleback Valley Escrow and Pacific Financial Group, but those companies were not involved in the fraudulent loan allegations, Meyers said.

Meyers said that the three men recruited people who never intended to purchase property, paid them as much as $10,000 for the use of their names and credit histories, and then filed false loan applications on their behalf.

Two Are Cooperating

He said two people who agreed to let their names and credit histories be used on false loan applications are cooperating with investigators.

Meyers said the $1.8 million in losses cited in the charges filed this week represents only a small portion of the fraudulent loan transactions discovered during a two-year investigation that began when Santa Paula Savings & Loan complained that it had been defrauded.

In addition to Santa Paula, the institutions allegedly victimized by the scheme include Security Savings & Loan in Danville, State Savings & Loan in Stockton, Gateway Savings & Loan in Oakland and Home Discounting Services in Modesto.