A sobbing Huntington Beach mortgage broker was sentenced to four years in federal prison Wednesday for defrauding Signal Savings & Loan in Signal Hill of millions of dollars in a scheme blamed for the thrift's collapse, prosecutors said.
Robert J. Herrera, 47, had pleaded guilty in March in federal court in Los Angeles to three felony counts of fraud and making false statements. Herrera, who owned United Security Mortgage Co. in Huntington Beach, had used mortgages he did not own as collateral to obtain a large line of credit from Signal. When United Security went bankrupt in 1987, Signal lost about $7 million in outstanding loans and was shut down by regulators in 1989.
Herrera could have faced a nine-year jail sentence and been ordered to pay up to $750,000 in fines. However, he has cooperated with prosecutors, repaid the failed thrift more than $800,000, and on Wednesday delivered a tearful apology to the court, prosecutors said. Herrera's attorney, Terry W. Bird, asked U.S. District Judge Robert M. Takasugi not to impose a jail term.
Noting the seriousness of the offense, however, Takasugi imposed a four-year prison term followed by five years' probation, and ordered Herrera to pay $223,065 in additional restitution, prosecutors said.
"In cases where people do not accept responsibility, go to trial, and are convicted, we are requesting and receiving double-digit periods of incarceration--up to 20 to 25 years," said Chief Assistant U.S. Atty. Terree A. Bowers, who is handling at least six other criminal cases involving savings and loans. "When people cooperate with us, we still insist on recommending some period of incarceration."
The message to savings and loan offenders, Bowers said, is: "Either way, you will end up serving some prison time because of the severity of these offenses."
Although Signal lost about $7 million, the amount of that loss attributable to Herrera is still being litigated in a separate civil action by the Resolution Trust Corp., the federal agency responsible for cleaning up after savings and loan failures.
Earlier this year, William D. Long, commissioner of the state Department of Savings and Loans, blamed the Herrera case for Signal's collapse, saying, "This fraud was what brought the institution to its knees."
Herrera made an $800,000 restitution payment in 1987 and has been making monthly payments of at least $2,000 since then, Bowers said. The $223,065 restitution order Wednesday is in addition to the payments already made, but if Herrera enters a civil settlement with the Resolution Trust Corp., any payment he makes could be credited toward the criminal fines, Bowers said.