33-year-old Portlander Chael Sonnen pleaded guilty in U.S. District Court to a single count of money laundering. The charges stemmed from a 2006 home sale in which Sonnen and others involved in the deal steered a $69,091 kickback to the buyer.
The government is recommending Sonnen be sentenced to two years of probation.
It's been a difficult six months for Sonnen.
After years in the trenches, Sonnen got a title shot in August against Ultimate Fighting Championship middleweight champ Anderson Silva. Sonnen dominated the first five rounds of the match. But Silva caught Sonnen in a triangle chokehold, forcing Sonnen to submit.
Weeks before that fight, Sonnen pulled out as a candidate for Oregon House District 37. Sonnen, a political novice, entered and won the Republican primary. But he ended his campaign with oblique references to legal problems.
"A 2006 legal issue has arisen that needs my immediate attention," Sonnen wrote in a statement published on the Fight! website. "I am not at liberty to disclose the details, but my name was involved in a real estate case that requires a ruling. If the ruling is adverse, I would be disqualified from running for office until 2011."
He could not be reached Monday. His attorney, Ron Hoevet, declined to comment.
The charge against Sonnen stems from the June 2006 sale of a home at 11249 S.E. Rolling Hills Lane in Portland. The lender, Decision One Mortgage, agreed to send more than $69,000 of the loan proceeds to a company called Crown Plumbing, a company owned by Sonnen's mother, for some repair work on the house.
The repair work was never done. Instead, the money went as a kickback to the straw buyer of the house.
Government prosecutors allege Sonnen cooperated with Joel Rosabal and Chadwick Amsden, two mortgage brokers with Lighthouse Financial Group, a now-defunct mortgage brokerage formerly based in Vancouver.
Rosabal and Amsden in May were indicted and charged with multiple counts of money laundering, mail fraud and other charges, in part for their role in the sale of the house on Southeast Rolling Hills Lane.
At least five people who worked with, or for, Lighthouse have been indicted on mortgage fraud charges.
As part of his plea deal, Sonnen agreed to give up his Realtor's license and pay a $10,000 fine, said Michelle Holman Kerin, the assistant U.S. attorney handling the case.
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In laymen's terms:
Crown Point Enterprises, a mortgage company whose legal documents you can read below, was trying to "sweeten" the pot for a buyer to purchase a home so they offered a kickback. They drummed up false repairs that the house "needed" as part of the sale of the house. Of course, the house didn't need repairs. Sonnen had negotiated previously with to not actually do anything but use the repair company as a conduit to pass the money on to Sonnen, who would then pass it on to the buyer.
The repair company involved was owned by Sonnen's mother.
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His sentencing is set to begin 10 days after he is expected to fight Yoshihiro Akiyama at UFC 128, according to sources close to the event, which today informed MMAjunkie.com of the pending booking just as news of the legal trouble broke.
It's unknown whether a looming prison sentence will torpedo the middleweight bout's possibility as representatives from the UFC could not be reached at the time of this writing.
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Sonnen could face up to 20 years in prison, but he is expected to cooperate as a witness against others involved in the mortgage fraud investigation, and so his sentence is likely to be considerably lighter.
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Press release from the U.S. Attorney's Office, Oregon
Chael Sonnen, 33, of West Linn, Oregon, plead guilty today to one count of money laundering in federal court before the Honorable Michael Mosman. Sentencing is scheduled on March 28, 2011 at 11:30 a.m.
Sonnen, a licensed realtor in the State of Oregon, admitted that a financial transaction he conducted was designed to conceal or disguise the ownership and control of the proceeds of wire fraud. The scheme involved Joel Rosabal and Chadwick Amsden, employees of Crown Point Enterprises, dba Lighthouse Financial Group (Lighthouse), a mortgage brokerage service based principally in Vancouver, Washington, with operations in Oregon and elsewhere. Rosabal and Amsden submitted a materially false loan application on the buyer’s behalf to Decision One Mortgage, a subprime lending institution that is now defunct, for the purchase of residential property located at 11249 SE Rolling Hills Lane, Portland, Oregon. Sonnen acted as the realtor for the transaction. Sonnen submitted a false letter and Sales Agreement Addendum instructing the title company to pay loan proceeds to a plumbing company for repairs to the home. In fact, Sonnen knew and had negotiated with Rosabal that no repairs would be performed on the home and the funds designated to the plumbing company would instead be paid to the buyer as a cash incentive to purchase the home. This agreement was not disclosed to Decision One Mortgage. Once the loan was funded, the title company paid over $69,000 to the plumbing company and the plumbing company, in turn and at Sonnen’s direction, paid $65,000 to the buyer of the home.
"This office will continue to aggressively prosecute real estate professionals who committed the mortgage fraud that contributed to this country’s economic downturn and wreaked havoc on our community’s housing market. We entrusted these professionals to honestly broker real estate transactions and instead, they defrauded lending institutions throughout the country and left financial ruin in their wake,” said Dwight Holton, U. S. Attorney for the District of Oregon.
Marcus Williams, the Special Agent in Charge of IRS Criminal Investigations for the Pacific Northwest said, "West Linn residents, and other residents throughout the Portland/Vancouver area, can rest assured knowing that federal law enforcement agencies take mortgage fraud very seriously because it played a major role in almost crippling this nation's banking system just a few years ago."
Money Laundering carries a maximum sentence of up to 20 years in prison and a $500,000 fine.
There are currently two other cases related to Lighthouse pending in the United States District Court of Oregon, United States v. Joel Rosabal et al., USDC Case No. 10-CR-00195 and United States v. Chadwick Amsden, et al., USDC Case No. 10-CR-00196. In addition, three other defendants have pled guilty and have been sentenced to charges related to Lighthouse as well: United States v. Kamau Herndon, USDC Case No. 09-CR-00068, United States v. Marty Folwick, USDC Case No. 08-CR-00280, United States v. Kristen Buse, Case No. 08-CR-00283.
This investigation was conducted by the Internal Revenue Service - Criminal Investigation and the United States Postal Inspection Service. The case against Chael Sonnen is being prosecuted by Assistant U. S. Attorney Michelle Holman Kerin. The pending cases involving Lighthouse are being prosecuted by Assistant U. S. Attorneys Michelle Holman Kerin and Allan Garten.
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