Hales called his arrest and past year in jail "the best and worst thing that ever happened to me."
"I promise to be a changed person," he said, adding the jail time, away from alcohol, had changed him.
"I do realize the pain I've caused you because my heart breaks every day," Hales told his victims.
Hales was indicted last year on charges of mail, wire, bank fraud and money laundering for purchases of properties in Lindon in Utah County and the Mill Creek area of Salt Lake County.
He pleaded guilty to one count of bank fraud involving the purchase of two properties in which he obtained inflated appraisals and falsified loan applications in order to obtain financing that was far in excess of the actual sales prices of the properties. He and others pocketed the difference. Besides bank fraud, court documents show Hales was involved in inflated vehicle loans, fraudulent investments and other schemes, as well as a number of mortgage frauds.
Federal agents describe Hales as a ringleader within a network of people who got together to plan and carry out various frauds. Hales told agents he had occasional meetings, at his home, involving mortgage-industry people during which they would talk about purchases in which they would falsely inflate the price or value of the properties and then "rip" the difference between the real price and the amount of the loan they obtained.
The only other person charged so far has been John Peter Brealish, who pleaded guilty to mail fraud and was sentenced to two years and eight months in prison in September.
Of the $12.7 million restitution in Hales case, Hales and Brealish are responsible jointly for nearly $7 million, with Hales required to repay the rest.
Judge Stewart said after Hales is released from prison, he must make monthly payments of at least $500 to the restitution fund.
In documents and testimony in court, federal agents have named Cedar Hills Mayor Eric Richardson as participating with Hales in some of the allegedly fraudulent activities. Richardson, who has not returned phone calls and emails seeking comment, and others have not been charged. But Assistant U.S. Attorney Patricia Parkinson Glenn said Tuesday the investigation is continuing.
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