Mortgage charges against Bellingham couple are dropped

Skagit judge says evidence was wrongly obtained

JOHN STARK

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Criminal charges have been dropped against a Bellingham couple who were charged with felonies in April 2007 in connection with what state investigators called a “foreclosure rescue scheme.”

In a criminal filing, the Washington Attorney General’s Office had accused Peter and Julia Torkild of theft, forgery, money-laundering and use of proceeds of criminal profiteering. The Torkilds have maintained they are innocent.

Skagit County Superior Court Judge David Needy ruled that the Washington Department of Financial Institutions had exceeded its legal authority in using its civil regulatory powers to collect evidence in the case. Needy then threw out that evidence.

Assistant Attorney General Scott Marlow, who acted as prosecutor, said Needy’s ruling eliminated the evidence that formed the basis of the criminal case.

“With the suppression of that evidence, we were unable to proceed with the criminal charges,” Marlow said.

The cases had been transferred to Needy after defense and prosecution could not agree on a Whatcom County judge.

The state had contended that the Torkilds used illegal means to get control of another couple’s Lummi Island home after promising to help them escape a pending foreclosure. The Torkilds entered not-guilty pleas in the criminal case, and have also denied wrongdoing in a civil lawsuit related to the same matter.

In the civil case, the court has rejected plaintiffs Darcee and John Johnston’s efforts to get back the title to the home, but the Johnstons still seek civil damages in their pending lawsuit.

Mark Lee, the attorney representing the Torkilds in the civil case, released a short statement on their behalf.

“The Torkilds have and will continue to fight the false accusations that they conducted a foreclosure rescue scam,” Lee’s statement said. “The state’s decision to drop the criminal charges, and the court’s dismissal of the accusers’ civil claims to regain possession of the property, is proof that the Torkilds are innocent. Although the Torkilds are pleased with the results, it is outrageous how the court system has been used to bully these innocent people.”

David Allen, the Seattle attorney who represented Peter Torkild in the criminal case, said state investigators erred in using their regulatory subpoena powers instead of going to a judge to get a search warrant in the case.

He also argued that the Torkilds were innocent of the charges against them. In an illegal foreclosure rescue scheme, the perpetrator typically “flips” or resells the property as rapidly as possible, but in this case the evidence showed that the Torkilds held on to the home and rented it to the Johnstons for a time before that couple fell behind on rent.

“It wasn’t a mortgage fraud case,” Allen said. “I think the state sort of belatedly realized that.”