No-contest plea in $20 million fraud case

The abrupt end to the Thomas Hastert fraud saga Thursday left some victims angry and others struggling to process their emotions.

"It feels surreal," said Melissa Kaput, who was instrumental in bringing Hastert to the attention of the authorities. "I'm still in shock."

Hastert, a Grass Valley lawyer and real estate loan broker, pleaded no contest to 62 counts related to a $20 million fraud case affecting more than 100 victims in six Northern California counties, including Sutter.

Another 21 counts of filing false instruments and one count of embezzlement were dismissed in Nevada County Superior Court.

Under the plea agreement, Hastert would receive five years in state prison; he could have faced as many as 32 years. Sentencing was set for 1:30 p.m. June 25. Restitution to victims will be determined at the sentencing.

Hastert appeared at ease during the lengthy proceedings, leaning back and rocking in his chair. Judge Sean P. Dowling read off each of the 62 counts to which Hastert was to plead no contest: 14 counts of embezzlement, 24 counts of offering and selling unregistered and unqualified securities and 24 counts of selling securities by means of oral or written communication containing false statements or omissions.

"I haven't really processed it," Kaput said. "I'm happy he's not dragging it out more, and it validates what we've been through."

Since his arrest in February, Hastert has been incarcerated at the county jail in Nevada City in lieu of $250,000 bail. The state Attorney Generals' Office charged that Hastert brokered more than 270 "hard-money" loans, which typically provide high returns, in Sutter, Nevada, Sacramento, Butte, Placer and Yolo counties for three years starting in September 2004.

"The plea bargain was a decision to cut this thing short," said defense lawyer Monica Lynch. "Our hope is this early plea will be taken as an indication that at no time did he intend to defraud anybody. He made mistakes, and he acknowledges that."

Hastert plans to address the public at the sentencing, she added. About a dozen victims were in court Thursday, many of whom expressed mixed emotions.

"There is a ripple effect that doesn't just go wide, it goes deep," said Joanne Clark, whose mother, Mary Schwartz, is one of the victims.

In some of the cases, it has affected three generations of the same family, she added.

Victim Pat Hurley said his wife, Barbara, taught Hastert's children at school. Hastert was the family's attorney, he added. "The one thing they should have gone after was (charges of) elder abuse," Hurley said. "He targeted the elderly, especially women."

Hurley considers himself one of the lucky ones — counting attorney fees, he estimated he lost about $60,000.

Greg and Susan Pellerin lost four investment properties and their own home, they said.

"I'm absolutely livid" about the plea bargain, Susan Pellerin said. "Our kids have no future."

"Look what it's done to our family," Greg Pellerin said. "I'm starting over at almost 50 ... We'd really like to see some of our money back. We've lost our retirement money, our investment money, our income and our credit, and that's the most difficult to fix. Hastert is saying he has no money. That's all we can go by, unless they can find it. Hopefully, they'll pursue it."

According to Lynch, Hastert has some cash in frozen bank accounts that will be applied toward restitution.

Liz Kellar is a reporter for the Grass Valley Union. Call 477-4229 or e-mail lkellar@theunion.com.