MASTERMIND OF $20 MILLION MORTGAGE FRAUD SENTENCED TO SEVEN YEARS IN PRISON

A San Fernando Valley man has been sentenced to seven years in prison for orchestrating a scheme to obtain more than $20 million in fraudulent mortgage loans from more than two dozen lenders.

William Lee Cranston, 35, of Studio City, was sentenced late yesterday by United States District Judge A. Howard Matz in Los Angeles. Cranston pleaded guilty last October to one count of bank fraud.

The conclusion of the case against Cranston completes a nine-year investigation that resulted in the conviction of 20 defendants responsible for causing $3.5 million in losses to 26 lending institutions.

Beginning in June 1990 and continuing until April 1993, Cranston caused fraudulent applications to be prepared and submitted for more than 100 home mortgage loans totaling more than $20 million. The purported borrowers were actually people who Cranston paid simply to use their identity and credit history but who had no involvement in the loan transaction and did not occupy the homes that were being purchased. Each application contained fraudulent documents such as pay stubs, tax records and bank statements that Cranston created on a specially designed computer system. These documents were used to create false employers for the purported borrowers and to inflate their income and assets so that the lending banks would be deceived into approving the loans. Cranston also created a series of sham employers and investment companies for the purposes of verifying the employment, income and assets of the purported borrowers. Cranston also set up toll-free telephone numbers for each of the sham entities so that when lenders attempted to verify information on the loan application, the calls would ring to his office where he and others would falsely confirm the information.

Cranston recruited people throughout the mortgage industry to assist him in his scheme. Nineteen co-schemers have been convicted, including five loan brokers, three bank employees, three loan representatives, two purported borrowers, an escrow officer, a real estate appraiser and a tax preparer. Additionally, two employees of Cranston and Leong Investments, the real estate brokerage firm Cranston formed with his partner Tony Leong, were charged along with Leong. Those other defendants received sentences of up to four years in prison.

Cranston became a fugitive in 1993, when the Federal Bureau of Investigation first began investigating the case. Cranston fled to Mexico, where he lived under the alias Oswaldo Ochoa. He later moved to Florida and Las Vegas, using the alias Ross Hellman. Cranston eventually moved back to the Los Angeles area. He was arrested Memorial Day weekend 2002 at Los Angeles International Airport after returning from a trip to Cabo San Lucas under the name William De Martini.

In addition to the prison sentence, Judge Matz stated that Cranston would also have to pay restitution for his offense in an amount to be determined at a later hearing.

The case against Cranston and the other defendants is the result of an investigation conducted by the Federal Bureau of Investigation.