Paso Robles lenders arrested for fraud and embezzlement

April 8, 2011


Real Property Lenders (RPL) of Paso Robles principals Rod Jarmin and Tammy Jordan were arrested this week for seven counts of fraud and embezzlement in connection with a scheme in which they allegedly swindled more than 700 investors out of about $30 million.

Jarmin, 72, plead not guilty Thursday in a San Luis Obispo courtroom to seven felony counts of the sale of securities by means of false statements and omissions. His bail was set at $5 million.

On Tuesday, a San Luis Obispo District Attorney investigator ordered Jarmin, who was at his country club Palm Desert home, to turn himself in by midnight or face arrest. He drove to San Luis Obispo County Jail and turned himself in late that night.

His partner, Jordan, 49, is currently incarcerated in a Montana jail awaiting a slated extradition to San Luis Obispo County Jail later this week on the same charges.

The former Paso Robles lenders stand accused of fraudulently selling securities to hundreds of investors, primarily seniors. Under their company, RPL, the duo would entice locals to invest in projects that they knew were failing, under false assurances that investor monies were secure, according to the investigation.

The misrepresentation or the omission of facts when offering or selling securities is a felony punishable by up to five years in prison and up to a $10 million fine, per violation.

Enticed by the promise of 12-percent interest on property-secured investments, approximately 700 investors entrusted their nest eggs with RPL in the form of hard money loans.

Jarmin said “people were lined up outside his door to invest their money with RPL,” according to a District Attorney’s office September 2010 interview.

Jarmin said his company’s portfolio contained more than $55 million, much of which is still owed to investors, according to a 2010 deposition.

In 2007, the California Department of Corporations (DOC) began an investigation into RPL.  The state revoked RPL’s license to sell securities in June 2008.

The San Luis Obispo County District Attorney’s office began its inquiry into RPL in December 2008 following the DOC investigation and pressure by numerous local citizens who filed complaints with the county alleging lending fraud.

The company had allegedly distributed inaccurate circulars that disclosed an outdated track record which only noted a history of four loan foreclosures, when in fact it had already foreclosed on 50 projects. The “offering circular” also claimed not a single investor had ever lost money invested in RPL.

Meanwhile, investigators say Jarmin and Jordan fraudulently used the erroneous circulars to lure 80 new investors to make 105 new deals in the amount of $9,223,000 from Feb. 22, 2007 through Dec. 31, 2007.

One of the more egregious investigation findings says that while the lending duo claimed a sound history, they managed to lure some investors into leveraging their retirement funds into projects that unbeknownst to them were days away from foreclosure, according to court documents.

For example, Jarmin and Jordan provided James Pope a property profile flyer that described the builder, Todd Evenson, as an “excellent borrower with excellent credit.” Pope said Jarmin personally told him the project he later invested in “was moving along without any problems and should be completed in a short amount of time,” court documents say.

On August 10, Pope invested $45,000 into the project. He received one partial interest payment before Jarmin and Jordan told him Evenson was in eminent danger of defaulting on the loan.

Pope soon discovered RPL had sent letters on Aug. 1, 2007 to the other borrowers on the loan explaining Evenson’s financial difficulties, nine days before Pope had invested his money into the project.

The lead investigator says he believes the RPL owners intentionally misled Pope into investing so they could use his money to pay other investors’ monthly interest payments in a “Ponzi-like” scheme.

When asked by the county’s lead investigator about Pope’s claim, Jarmin said, “I’m not going to dispute any of that.”

In her October 2010 interview with the lead District Attorney investigator, Jordan said, “that was an oversight.”

Investigators also accuse RPL principals of not properly qualifying borrowers and of misleading developers into believing the project loans were fully funded.

For example, RPL approved $1.3 million in loans for developer Jeff Martin. Even so, Martin said he did not have sufficient collateral to make the payments and that RPI failed to verify any of the information he listed on his loan application.

In her defense, Jordan described these loans to investigators as yet another “oversight.”

Martin told investigators that Jarmin and Jordan pressured him into starting his three projects which were nowhere near completion when he was informed by RPL that no funds were available to finish construction. Martin said he was deceived into believing the loan was fully backed and would not have accepted the $1.3 in loans otherwise.

Another RPL borrower, Tony Gaspar, financed a go-cart track at his Templeton home by having the asphalt contractor change the work address so it would be covered by a group of RPL project investors, according to work orders and Clint Osborne, the contractor who did the work.

These types of misuses of funds were possible because RPL failed to provide adequate oversight.

Jordan and Jarmin assured investors they would dole out money to contractors in progress payments as the properties were developed. However, they did not inspect projects as promised.

When borrowers failed to make payments, instead of foreclosing as required by their loan servicing agreements, RPL instead would cover the costs by bringing in new investors selling out more than 100 percent interest in properties.

Jarmin’s attorney, Ilan Funke-Bilu, argues that Jarmin’s $5 million bail, which is one of the largest in county history, should be reduced.

“Bail is not about guilt or innocence,” Funke-Bilu said noting that bail is supposed to be set according to issues of public safety and the probability that the defendant will flee.

District attorney officials seized Jarmin’s passport, bank accounts and assets with the exception of a truck and a fifth wheel.

“He is not a threat to anyone,” Funke-Bilu said. “What’s the likelihood of a 72-year-old man fleeing this country without a passport?”

Funke-Bilu is also questioning why a District Attorney investigator searched Jarmin’s wife’s purse and seized $5,000.

“They left her with $4,” Funke-Bilu added. “She is not charged with anything.”

Jarmin’s bail hearing is set for April 14 at 8:30 a.m. and a preliminary hearing is scheduled for April 19 at 10 a.m. Jordan will face charges following extradition.

As for the investors, even though a search is still underway for all assets and accounts owned by the defendants, it is uncertain whether investors will ever recoup their losses.

“It is my belief that aggravated white collar crime, as defined in Penal Code section 186.11, has taken place and the amount of restitution and fines will exceed $10 million which exceeds or equals the net worth of the defendants’ assets,” said District Attorney investigator AJ Santana.

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I knew Tammy Jordan more than 25 years ago when she was a teller at Century Federal Savings. So sad that a nice person can get in way over their head and greed can corrupt so absolutely. I would have never dreamed 25 years ago she would have come to this. Makes you stop and think about every decision you make and reassess what is important in life.

These criminals will likely get no more than a slap on the wrist if the DA’s office and SLO judges have their way. Look at the deal they cut with Karen Guth and Joshua Yaguda. They’ll both be out of prison and pouring olive oil along side their daughter-in-law/wife at Pasolivo Olive Ranch long before the Estate Financial bankruptcy is complete. SLO officials seem afraid to take these criminals to task. Wonder why? The victims of Gearheart, Kennedy, Miller or these guys will never see juctice done in this county. Too bad.

You forgot to mention the attorney helping alot of these players and a main player of the good ole boy network Attorney Robert Grigger Jones

yeah I heard they are both out of jail as of today! The trial hasn’t even happened and they are both walking around with a lot of other people’s money! Wonderful court system!

Here is section a(1) of CA Penal Code section 186.11. This section 186.11 is quite lengthy with subsections a through l. A search of CA Penal Code 186.11 will show you the entire code, but section a(1) says enough:

186.11. (a) (1) Any person who commits two or more related

felonies, a material element of which is fraud or embezzlement, which

involve a pattern of related felony conduct, and the pattern of

related felony conduct involves the taking of, or results in the loss

by another person or entity of, more than one hundred thousand

dollars ($100,000), shall be punished, upon conviction of two or more

felonies in a single criminal proceeding, in addition and

consecutive to the punishment prescribed for the felony offenses of

which he or she has been convicted, by an additional term of

imprisonment in the state prison as specified in paragraph (2) or

(3). This enhancement shall be known as the aggravated white collar

crime enhancement. The aggravated white collar crime enhancement

shall only be imposed once in a single criminal proceeding. For

purposes of this section, “pattern of related felony conduct” means

engaging in at least two felonies that have the same or similar

purpose, result, principals, victims, or methods of commission, or

are otherwise interrelated by distinguishing characteristics, and

that are not isolated events. For purposes of this section, “two or

more related felonies” means felonies committed against two or more

separate victims, or against the same victim on two or more separate


The article says “allegedly swindled more than 700 investors out of about $30 million” which simply isn’t true if the investments were secured by deeds of trust. I can’t believe that every investor lost every penny of their money.

SLO Watcher… it looks like you are a long time investor in trust deeds. Would you agree that when it comes to funding projects, just because the law doesn’t provide for fully funding a project in advance doesn’t mean that brokers shouldn’t have done it? To me, regardless of whether the borrowers wanted to pay interest on the funds or not, the brokers are the ones making policy for their own companies… common sense imho.

The problem with many of the folks that invested their money in these trust deeds is that all they cared about when they wrote the checks to their brokers was getting 12% to 14%. They never did any due dilligence or tried to educate themselves as to what makes a good trust deed investment. Since when is it a good idea to invest without knowing what you are doing? I feel bad for any investor who lost money but investing in trust deeds comes with risk… once again common sense. A sloppy broker on top of uneducated investors spells disaster.

I find it hard to believe that some people equate criminal activity with ” a sloppy broker” and “uneducated investors”. This makes about as much sense as advising people not to put their money in the bank because it might be robbed. This was a crime pure and simple. It is not the fault of the victim as some would have you believe. There is a chance that Rod Jarmin will spend the rest of his life in prison because of this crime, and rightly so.

The reason most of these investments are worth next to nothing is the property taxes haven’t been paid for months or years. In some cases the back taxes are more than the property is worth.

You are so right on and let’s not forget that the First Trust Deeds were sold at above 100% of current market value at the time of investment. Then include the fact that the invest was based on a developed project and BINGO.

There was a time when we could depend on our “gubment” to over see the “would be” Wall Street “pranksters” and the “banksters”. Our tax dollars actually went towards valuable un-intrusive oversight. Today the “gubment” is an overinflated corrupt and intrusive nanny that drowns the kids and gives the perpetrators a raise for attending the funeral. Times aren’t what they used to be, old folks. The time for trust has long since dissipated.

After reading an example of how they mislead Pope and a few others, I’ve heard enough excuses.

If the examples sited in this article aren’t indicative of outright intentional FRAUD, then I’d like to hear an example of what is? RPL misrepresented itself at every turn, not just in their circulars but in their one on one discourse with investors. They may have started out with good intentions and became engendered when the funds started coming through the door and the fees started to rack up, I don’t care there is no excuse for their behavior. They weren’t stupid and if they lost control then they were supposed to reign it in, not escalate it. Bottom line is that they eventually conducted themselves as heartless, dangerous, swindlers.