$25-Million Fraud Mastermind Gets 9 Years

Douglas P. Blankenship, a Capistrano Beach man accused of masterminding a $25-million fraud against a score of financial institutions and companies by posing as a wealthy real estate developer, was sentenced Friday to nine years in prison.

Blankenship and 13 other associates had pleaded guilty in federal court in Seattle to defrauding Puget Sound National Bank of $4.5 million and stealing millions of dollars more from other financial institutions, companies and private investors in 17 states between 1982 and 1990.

Characterizing Blankenship, 48, as “a danger to the public,” U.S. District Judge Robert J. Bryan sentenced him to the maximum term permitted under federal sentencing guidelines. He said he “wanted (Blankenship) out of circulation for as long as the law allows.”

Bryan said he did not believe Blankenship’s statements in a letter to the court expressing remorse for the crime. The judge said he did not fine Blankenship because he wanted whatever money Blankenship may have to go to the victims.

He scheduled a hearing for Dec. 13 to determine the amount of restitution Blankenship will be ordered to pay.

Blankenship, who was arrested in San Clemente on Nov. 1, 1990, is the 10th person to be sentenced in the case. Nine others were sentenced earlier this month to prison terms ranging from six months to four years. The rest are scheduled for sentencing in October.

Blankenship and his associates were accused of obtaining $25 million in loans and credit through forged documents and fraudulent financial statements and tax returns, the prosecution said. Blankenship told his victims that he was one of the nation’s biggest builders of custom homes. In reality, his company was little more than a shell corporation with no assets.