Shawn Portmann: Loan Wolf

In 2006, Cheryl Hardtke was getting a divorce and desperate for a new place to live. She thought she found one when a friend told her he was selling his house in Lake Tapps, near Puyallup. Her friend even knew of a banker who could handle her mortgage application, an old high-school buddy named Shawn Portmann, who now headed the home-lending division of Tacoma-based Pierce Commercial Bank.

Illustration by the Little Friends of Printmaking

Some months, Portmann completed an astounding 120 loans.

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• Shawn Portmann
• Mortgage Banking and Services
• Industries
• Credit Services and Intermediation
• Pierce Commercial

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There was just one problem, Hardtke told Portmann in his Puyallup office. Having recently stopped work as a dental assistant because of a back condition, she wasn't making any money. There was no way she could possibly qualify for a loan.

Portmann told her not to worry. "We'll take care of it," he said.

According to Hardtke, he did so by creating for her a phantom $4,000-a-month job. On her loan application, Portmann wrote that she worked for a car-upholstery company run by the high-school pal who'd introduced them.

The 53-year-old Hardtke claims she didn't realize the fabrication when she signed the loan documents. Reeling from the divorce and strung out on pain medication, she says, "I wasn't in my right mind." Later, facing foreclosure, she filed a complaint about Portmann with the state attorney general, accusing him of falsifying documents.

Hard-charging, high-living, and imperious, with a Hummer parked outside and a team of in-house underwriters at his disposal, he told Hardtke what he told any borrower, employee, or acquaintance who would listen: "I own the bank."

That wasn't exactly true, but truth didn't seem to trip Portmann up. Federal authorities and former bank officials say he frequently made up information out of whole cloth—and then created phony documentation and padded borrowers' bank accounts to back up his lies.

"There was no limit," says a former Pierce Commercial employee, who spoke at length to Seattle Weekly on condition of anonymity. "If you could make it fraudulent, Shawn would do it."

Indeed, some of Portmann's alleged tricks have surprised even veteran watchers of the nation's mortgage meltdown. The former Pierce Commercial co-worker says that Portmann would not only conjure up imaginary jobs, but fake W-2s as well.

And if borrowers didn't have enough cash on hand to qualify for a mortgage—well, that was not a problem, either. Portmann, according to authorities, would "season" his clients' bank accounts with his own money, some of which he kept stashed in a home safe for just that purpose.

"I've never heard of that deception before," says Alan Hess, a professor of finance at the University of Washington.

The 38-year-old Portmann is now under investigation by the FBI. The U.S. Attorney's office won't comment on the case in advance of an indictment, which sources expect to be imminent. But in a court document filed in July, the office asserted that more than half of the loans brokered by Portmann during his tenure at the bank were fraudulent—either because the banker falsified a borrower's income, forged supporting documents, submitted an inflated house appraisal, or fibbed in other ways.

The "scheme," as the feds call it, was simple. In a business where every new mortgage brings in fees, Portmann would do whatever was necessary to close as many loans as possible. He was extraordinarily successful.

From the time he started at Pierce Commercial, in 2004, until he left four years later, Portmann generated more than 5,200 loans. That accounted for nearly half of the $2.2 billion loan business done by his entire division, which by one account employed some 80 loan officers.

On average, Portmann was closing roughly 120 loans a month. By way of contrast, an average hard-working mortgage broker might close between 10 and 15 loans a month, according to Brad Williamson, head of the banking division of the state Department of Financial Institutions.

"I believe he personally was the largest single loan producer in the state," Williamson says.

Indeed, from the small burg of Puyallup, best known for its roller coasters and animal exhibits during its annual state fair, Portmann turned himself into a national powerhouse. In fact, the trade publication Mortgage Originator repeatedly ranked him among the top 10 loan brokers in the country.

Given the percentage of his loans that were allegedly fraudulent, Portmann may also have set another kind of personal record. David Leen, a prominent Seattle real-estate lawyer, says, "That's a staggering number of defective loans."

Ultimately, the bad loans brought down the 13-year-old Pierce Commercial Bank, once a respected community institution that specialized in small-business loans. On November 5, DFI closed the bank, following mortgage-related losses and more than a year of investigations conducted by its own agency as well as the FBI and the Federal Housing Administration. Heritage Bank acquired the failed bank's assets.

If Portmann is indicted, he will be one of the first banking officials in the country to face criminal responsibility for the shady loan practices that have brought the financial industry—and the entire national economy—to its knees. But some wonder what took the authorities so long to act. "This was not a secret," says John Henderson, who until recently headed the mortgage division of now-defunct City Bank, of Portmann's tactics.