Shawn Portmann went to court Monday afternoon in a pinstripe suit.
By evening he was in a prison uniform.
U.S. District Judge Benjamin Settle sentenced Pierce County’s king of bad home loans to 10 years for a mortgage fraud scheme that brought down a local bank, ensnared nine of Portmann’s former employees and left dozens of families in foreclosure.
Settle ordered Portmann, who’d been free pending sentencing, detained immediately, rejecting arguments from the defendant’s attorney that he be given time to get his affairs in order before reporting to the U.S. Bureau of Prisons for assignment.
A hearing to determine the amount of restitution Portmann must pay will be scheduled at a future date. Regulators believe the fraud cost Pierce Commercial Bank more than $10 million in losses.
It was a long fall for the 40-year-old Portmann, a former senior vice president at Pierce Commercial. He pocketed more than a $1 million a year in salary and bonuses as he and his crew churned out thousands of mortgages between 2004 and 2008, court records show.
Still, Portmann got a break. Federal prosecutors had asked Settle to give the Puyallup native 14 years.
“Shawn Portmann’s greed destroyed dreams, ruined careers and defrauded millions from taxpayers,” U.S. Attorney Jenny Durkan said after the sentence was handed down.
Settle said he decided on the lesser sentence in part because of the nearly two dozen letters he received attesting to Portmann’s character, hard work and generosity.
Portmann, the judge said, pursued the American Dream with vigor but at some point forgot that success should be tempered with a sense of responsibility, respect for the law and the spirit of service to others.
“Somewhere along the line you forgot these principles,” Settle said. “The dream got corrupted, and you lost your way.”
Portmann pleaded guilty last fall to two counts of conspiracy to submit false loan applications and submitting false statements to a financial institution to obtain a loan.
The failure of dozens of those loans led to the demise of Pierce Commercial Bank and foreclosure for many people who were approved for mortgages they couldn’t afford.
At his September plea hearing, Portmann told Settle he’d fabricated employment, financial and housing records to ensure loans would be funded. Federal investigators identified at least 300 such loans, court records show.
Portmann was one of the nation’s top home-loan generators during the housing bubble. Federal prosecutors contended he and his employees generated nearly $1 billion in home loans between 2004 and 2008, raking in huge profits in the process.
Nine of Portmann’s employees previously have pleaded guilty and been sentenced to prison terms for their roles in the fraud.
“Portmann risked the future of the bank and well-being of his staff and home buyers in order to satiate his own greed and ego,” federal prosecutor Brian D. Werner wrote in a sentencing memorandum. “Portmann’s conduct, moreover, was emblematic of the housing bubble; that is, tell any lie necessary, get paid first and push the problems that come with home finance on to someone else, another bank, the next borrower or the government.”
The defendant’s attorneys, Robert G. Chadwell and Krista K. Bush, recommended a sentence of 10 years, which was the low end of the negotiated range.
They argued their client was physically and emotionally abused as a child growing up poor in Puyallup. Portmann “threw himself into his work” as an adult to try to overcome his upbringing, they said.
“The fear of losing what he did not have as a child and had worked so hard to gain as an adult lurked behind many of the decisions he made to do whatever was necessary to continue to close loans,” Chadwell and Bush wrote in their sentencing memorandum.
“This insight is not offered to excuse Mr. Portmann’s behavior — he is fully responsible for his actions and is not arguing otherwise — but to provide an explanation that is firmly grounded in his personal history and character.”
Real estate agent J.B. Downie was one of the people who wrote letters on Portmann’s behalf. Downie called Portmann generous, caring and hard-working.
“… this is what I want people to know about Shawn: Shawn Portmann is a good person who cared about me and people around him,” Downie wrote. “It makes me sad to read articles about him that portray him as an evil dictator that yelled and swore and tried to manipulate and take advantage of every person he met.”
In a written statement submitted to Settle, Portmann said he had no one to blame but himself and offered his apologies to those hurt by his actions.
“I have hurt people and their families,” he wrote. “I was arrogant and angry, and I misused my position at the bank. I am humbled and profoundly saddened by my actions, my poor judgment, and the harm I have caused to everyone involved.”
Portmann said in court Monday that he first was in denial about the harm his actions caused but over “the last fifteen hundred nights” realized the error of his ways.
“The last four years have been a hellish nightmare for me,” he said. “But I know I am a better person now than when I started on this path.”