Trump commutes sentence of former Sunwest CEO

SANDPOINT — Former President Donald J. Trump is commuting the sentence of a former management company CEO accused of operating a Ponzi scheme during the national credit crisis.

Jon Michael Harder has served five years of a 15-year sentence after pleading guilty to misuse of his company's funds in U.S. District Court in Oregon. He received the commutation on Wednesday, according to the White House.

Sunwest's creditors were represented by Sandpoint attorney Ford Elsaesser while the company was in receivership. Elsaesser and others involved in the litigation supported the commutation because Harder accepted responsibility, pleaded guilty and cooperated fully with the government's civil and criminal actions against him at "great personal cost," the White House said in a statement announcing Trump's 73 pardons and 70 commutations.

Elsaesser said in the White House clemency statement that "of all the financial wrongdoers that [the court and government] dealt with during the real estate crash of 2008, Mr. Harder acted more responsibly than any of his 'peers.'"

"Fifteen years was, candidly, outrageous," Elsaesser said on Wednesday afternoon.

Elsaesser noted that none of the players responsible for the mortgage meltdown in 2008 received custodial sentences, while Harder cooperated so fully that investors were made whole or nearly whole, which he said rarely happens.

"Most of the people involved in these matters lawyer up. They take the Fifth Amendment. They don't cooperate," said Elsaesser.

Elsaesser said the assisted-living business was sold to a company called Blackstone.

"People who let their money ride with Blackstone ended up getting 115 cents on the dollar. You just don't see that in my world," Elsaesser said.

Harder, 55, is serving his sentence at a federal lockup in Sheridan, Ore., according to the U.S. Bureau of Prisons website. He was slated for release in 2028.

Sunwest was founded by Harder in Salem, Ore., in 1992 and oversaw 320 assisted-living facilities in 34 states at its peak in 2007. The company began raising money from investors in 2001 to fund its expanding operations, a civil complaint brought by the U.S. Securities & Exchange Commission states.

Between 2006 and 2008, Sunwest raised at least $300 million from 1,300 investors, mainly through the sale of tenancy-in-common interests, according to the SEC. Investors were told they were purchasing ownership interests in a specific retirement home that would generate enough of a profit to pay a 10 percent annual return.

However, Harder was able to hide the fact the purported profitability was largely dependent on the success of other properties, the continuing availability of credit and Harder's ability to raise new money or borrow it from friends. Moreover, operating funds were comingled to conceal losses and the true risks to investors.

"As the national credit markets tightened in 2007 and 2008, the house of cards Harder had built came crashing down on unsuspecting investors," the SEC complaint alleged.

Harder was indicted on 56 criminal charges related to the scheme. He pleaded guilty to one count of mail fraud and count of engaging in monetary transactions derived from a specified unlawful activity, according to court documents.

Former U.S. Chief District Judge Michael Robert Hogan, who oversaw Sunwest's bankruptcy and receivership, said in the White House statement that Harder's full cooperation "against his substantial and penal interests" helped secure the sale of company assets, ensuring that Sunwest's investors recovered more of their investment. Harder's cooperation further ensured that seniors could continue living in their facilities and employees could retain their livelihoods.

Keith Kinnaird can be reached at kkinnaird@bonnercountydailybee.com and followed on Twitter @KeithDailyBee.