Last Desert Sun Development defendant pleads guilty

13 charged; ex-loan officer could face five years, $250,000 fine

EUGENE, Ore. - A former Bend loan officer pleaded guilty Thursday in federal court to his role in a major fraud case that cost a bank more than $2.6 million on fraudulent loans, the last of 13 to do so in the Desert Sun Development case, prosecutors said.

Jeffrey Sprague, 50,of Bend, appeared before Chief U.S. District Court Judge Ann Aiken and pleaded guilty to conspiracy to make false statements to a financial institution, to commit wire fraud, and to commit bank fraud, the U.S. Department of Justice said.

The charge arose out of the collapse of Desert Sun Development, a Bend development and construction company that built properties across Central Oregon from 2004 to 2008 before it collapsed.

Sprague was one of 13 people charged in 2009. Prosecutors said losses totaled $19 million. All 13 have now pleaded guilty.

As part of his guilty plea, prosecutors say Sprague admitted that he caused his former employer, West Coast Bank, to lose more than $2.6 million on fraudulent loans.

According to court documents, Sprague, a loan officer at West Coast Bank at the time, falsified loan applications for Desert Sun employees and others by fraudulently inflating their monthly income and falsely claiming that these homes were going to be the employees' primary residences, when he knew these homes were part of the company's flipping scheme.

Sprague also knew that these loan files contained forged or scanned signatures and other material misrepresentations and omissions, federal prosecutors said.

West Coast Bank approved and funded the loans for Desert Sun employees and others based on the loan applications Sprague falsified, they said, as well as the other documents that Sprague submitted to the bank that he knew were false.

Sprague is scheduled to appear before Chief Judge Aiken for sentencing on Sept. 3. Sentencing hearings for the co-defendants are scheduled for July 10 and July 31, also before Chief Judge Aiken.

A conspiracy charge carries a maximum sentence of five years in prison and a $250,000 fine.

This case was investigated by the FBI, IRS-Criminal Investigations, and the Oregon Division of Finance and Corporate Securities. Assistant U.S. Attorney Scott E. Bradford is handling the prosecution of the case.

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