Originally posted Tuesday, 8:24 a.m.
The chief executive of an Lake Forest-based mortgage banking and financial services firm who pleaded guilty to a Ponzi scheme that caused two dozen victims to lose about $1.5 million was sentenced Monday to 41 months in federal prison.
David Lee Hardin Jr., 59, of Coto De Caza, pleaded guilty in March to mail fraud. Hardin, who was chief executive and majority shareholder of Covenant Mortgage, Covenant Marketing, Covenant Debt Solutions, Covenant Insurance and HRE Mortgage, collected more than $6.7 million in the scheme.
U.S. District Judge James Selna ordered Hardin to pay $1.5 million in restitution.
Hardin was eligible for up to 51 months in prison, but prosecutors recommended the lesser punishment.
Hardin's attorney, Katherine Corrigan, requested no more than a year with two years of supervised release for her client.
Another chief executive, Albert Lissoy of Far West Industries in Santa Ana, wrote a letter to Selna asking for leniency for his friend of 13 years.
Lissoy said he intends to hire Hardin when he is released from prison to help him with a nonprofit organization that provides housing for low-income families with a particular focus on widows and orphans of military service members and first responders as well as victims of domestic violence.
Hardin operated his business out of a building at 23101 Lake Center Drive, near the Holiday Inn. He is a graduate of Cal State Fullerton.
From April 2007 through July 2010, Hardin sought investors for a side venture related to his mortgage business, according to authorities. The investments were structured as loans to Hardin's businesses at fixed rates of interest.
Hardin told his investors he would use the money to finance a residential development, originating mortgages and to finance his debt-settlement business.
Hardin said revenue from home sales, mortgage fees and debt settlement services would pay back the investors, according to authorities.
Instead, Hardin used the new revenue to pay off earlier investors and kept some of the money for himself to pay rent and make car payments.
Hardin's son, Tim, wrote a letter to Selna saying the defendant taught him to be generous to the needy. The son recalled how one Christmas the defendant took his four sons on a train to South Los Angeles and gave the children five $20 bills and told them to find a needy family.
Tim Hardin said his father had tears in his eyes as his son gave the money to a poor family.
"I thought, 'This is what life is about!' I truly feel money can buy happiness and know beyond a doubt it did that day, however, my dad showed me that money only buys happiness when used to help others," Tim Hardin wrote in the letter.
—City News Service