Local man pleads guilty to fraud

A Newport Beach man charged with swindling money lenders out of more than $9 million pleaded guilty to wire fraud and money laundering, federal prosecutors announced Wednesday.

Kenneth Christopher Ketner, 57, who ran Mortgage Capital Resource Corp., used mortgage money for personal expenses, federal prosecutors said. He pleaded guilty Tuesday.

Newport Beach resident and attorney Allen Johnson, 59, pleaded guilty last year to wire fraud and money laundering for taking part in Ketner’s scheme, prosecutors said.

Ketner will be sentenced Dec. 4 and could face a maximum of 15 years in prison. Johnson is scheduled to be sentenced early next year.

Wire fraud and money laundering carry a maximum penalty of 15 years in federal prison, but prosecutors have worked out a plea agreement of about five years that the judge in the case has to approve.

In the scheme, Ketner and Mortgage Capital Resource Corp. drew lines of credit from commercial lenders and said they funded home loans for borrowers nationally. Instead, Ketner, with Johnson’s help, spent the borrowed money on themselves, prosecutors said. Ketner spent the money on the corporation and on personal expenses like his car, credit card and boat payments, according to the U.S. attorney’s office.

Then, to conceal the misappropriated money, Ketner used the company to acquire new loans to pay off the original borrowers, prosecutor said.

— By Lauren Vane