Fraud Charges for O.C. Man

The former head of a Newport Beach mortgage company was arrested Thursday on wire fraud and other charges after he was accused of bilking lenders out of more than $9 million, federal prosecutors said.

Kenneth C. Ketner, 57, of Newport Beach faces a 14-count indictment that asserts he took money that should have gone to borrowers and used it to run his now-shuttered Mortgage Capital Resources, Assistant U.S. Atty. Andrew Stolper said.

Ketner is also accused of laundering some of the money through offshore accounts. And the indictment claims that he misdirected lenders’ funds to help pay for a $244,000 Ferrari.

Efforts to reach Ketner for comment were unsuccessful.

As part of his alleged scheme, Mortgage Capital Resources would make loans to customers on behalf of various lending institutions. Once the loans were approved, the lenders would transfer the money to Mortgage Capital to disburse to borrowers.

But in hundreds of instances, the customers never received any funds, Stolper said.

“Borrowers were the first to see what was wrong when they didn’t get a check or received a check that bounced,” he said.

In the end, it was the lenders that allegedly lost about $9 million, Stolper said. Many of the loans were in the tens of thousands of dollars, meant for borrowers wanting to consolidate their debts by using the equity in their homes.

The lenders allegedly defrauded were not named.

The case has been under investigation for some time, Stolper said. Last year, at least four former Mortgage Capital loan officers were sentenced in Nevada and Alabama.

Indicted along with Ketner was Allen Johnson, 59, a Newport Beach lawyer who allegedly aided Ketner. He faces six counts of wire fraud and one count of conspiracy to launder money.