Bill Mercer, United States Attorney for the District of Montana, announced today that during a federal court session in Billings, on March 26, 2009, before Chief U.S. District Judge Richard F. Cebull, ANGELA HAKALA, a 35-year-old resident of Billings, appeared for sentencing. HAKALA was sentenced to a term of:

• Prison: 1 day (time served)

• Home Arrest: 6 months

• Supervised Release: 5 years

HAKALA was sentenced in connection with her guilty plea to bank fraud.

In an Offer of Proof filed by the United States, the government stated it would have proved at trial the following:

Intermountain Mortgage Company, Inc. (IMC), of Billings, Montana was in the business of originating, brokering and servicing first and second mortgage loans. HAKALA was employed by IMC as Chief Financial Officer and bookkeeper for the business.

As part of the business, IMC obtained a line of credit from First Citizens Bank of Billings, Montana, a federally insured financial institution, to fund mortgage loans that IMC later sold in a secondary market. To obtain funds from the line of credit, IMC reported its financial condition to First Citizens Bank each year in the form of financial statements that were audited by the accounting firm Eide Bailly, L.L.P.

IMC assisted in the audit of its financial statements by supplying financial information to Eide Bailly, L.L.P., including lists of closed mortgage loans that IMC had sold but had not yet received payment, which were reported on IMC's financial statements as "Receivables - Mortgage loans sold to customers."

First Citizens Bank used IMC's audited financial statements to determine the amounts of money it would loan IMC under its line of credit.

By March of 2004, IMC was in financial trouble. Its bills began to exceed its receipts by a substantial margin.

In order to prevent First Citizens Bank from learning of IMC's financial problems, HAKALA began supplying false financial information to Eide Bailly.

In preparation for Eide Bailly's audit of the IMC financial statement for 2004, HAKALA prepared a list of "2004 Notes Receivable." On this list, HAKALA knowingly included 13 mortgages that were no longer "receivable" because IMC had already been paid.

A year later, IMC's business had not improved and it had fallen further behind. Once again, HAKALA prepared a list of "Notes Receivable" for Eide Bailly's audit of the IMC financial statement. Reflecting the deeper financial difficulties at IMC, HAKALA'S list of "Notes Receivable" for 2005 contained 19 notes that were no longer "receivable" because IMC had already been paid.

In the spring of 2006, HAKALA again submitted similar false financial information to Eide Bailly to conceal IMC's true financial condition. This time, HAKALA submitted a list of "Notes Receivable" to Eide Bailly containing 26 notes that were no longer "receivable" because IMC had already received payment.

First Citizens Bank relied on the false information that HAKALA supplied to Eide Bailly as part of the annual audits of its financial condition. Had First Citizens Bank known the true financial condition of IMC, particularly the amounts of its actual accounts receivable, it would have reduced or entirely shut down its line of credit loans to IMC.

The result of the foregoing fraud on First Citizens Bank allowed IMC to continue running its business operations with borrowed money that it had no ability to repay.

After the deceptive listing of "Notes Receivable" was discovered, HAKALA sat for two interviews with the F.B.I. During these interviews, HAKALA admitted to "cooking the books" at IMC to prevent the company from bankruptcy. She further admitted that she knew that, by giving Eide Bailly an inflated list of "Notes Receivable," she was falsely misrepresenting the financial condition of IMC. Finally, HAKALA stated that the funds received from First Citizens Bank pursuant to the scheme were used to fund the operations of IMC.

Because there is no parole in the federal system, the "truth in sentencing" guidelines mandate that HAKALA will likely serve all of the time imposed by the court. In the federal system, HAKALA does have the opportunity to earn a sentence reduction for "good behavior." However, this reduction will not exceed 15% of the overall sentence.

Assistant U.S. Attorney Leif M. Johnson prosecuted the case for the United States.

The investigation was conducted by the Federal Bureau of Investigation.

 

 

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