“You don’t know me but you don’t like me,
You say you care less how I feel.
How many of you that sit and judge me
Ever walked the streets of Bakersfield?”

Homer Joy, “Streets of Bakersfield”

On the spring day in 1988 when he turned 41, Carl Cole left the small town in North Carolina where he had grown up as a boy and fallen into disgrace as a man. With his wife and their two sons he headed out west, to Bakersfield, California, and prayed for something better. A Christian, Cole had seen miracles with his own eyes – believers speaking in tongues, the sick healed by faith alone – and he clung to the words of scripture promising that “all things work together for good to them that love God”.

Many things did come together, for a time. In southern California, Cole’s cup ran over. He worked hard, learnt how to sell real estate and grew wealthy. He wore Armani and Brioni, drove a Lamborghini, a Mercedes and a Corvette, biked in the mountains, smiled at the local television audiences at home and pursued a deal to build the tallest towers in the state between San Francisco and Los Angeles – all the while watching out for signs from up above, for direction from the Good Shepherd in whom he trusted.

But Cole lost his way – again. He became one of the people who helped cause the global financial crisis – which, as unlikely as it sounds, was the kind of thing that could happen to a God-fearing man selling houses in a hot property market such as Bakersfield in the past decade. Cole and his confederates found themselves facing the temptation of a lifetime. They could cheat people who knew less about their local property market than they did – out-of-town bankers who came to Bakersfield to buy mortgages to package into bonds, but left their brains back east, or wherever it was they came from. It was easy money for people who had known hard times, but it put Cole on the wrong side of the law. Banks that cheat people pay fines, but people who cheat banks do time – and in Cole’s case, he is now looking to do a lot of it.

Cole is to be sentenced on February 18 for his role in a mortgage fraud case that helped turn Bakersfield into one of the home foreclosure capitals of the US. He and 13 other people associated with his real estate firm – including his son Caleb, 38, and his business partner, David Crisp, 34 – have pleaded guilty in schemes that used fake or “straw” buyers to push up property prices in the boom, causing $30m in losses to banks in the bust. Under federal guidelines, Cole could be sent to prison for more than 15 years. Under his agreement with the government, his lawyer will ask for “no less” than eight. In any case, at 66, Cole faces another sad trip to another new place – prison – and the hard work of explaining to others and to himself how a country boy who got his second chance wound up making such a mess out of it.

“It was la vida loca,” Cole says. “It was a crazy life for while.”

I met Cole during his final weeks of freedom in California in the company of his lawyer, Katherine Hart. A bookish member of the state bar, given to citing writers such as Philip Roth in her legal filings, she recommended me to her client as a visiting “intellectual from the east”, and it was easy to see why that appealed to Cole. Over drinks and dinner, he came across as the kind of character Gabriel García Márquez would have conjured up if the master of magic realism had been living closer to Bakersfield than Bogotá. Cole is a very complicated guy.

He is a political conservative who rejects the theories of Charles Darwin and listens regularly to the rightwing radio commentator Rush Limbaugh. He is also a dedicated environmentalist – the author, under a pseudonym, of a series of online books called Sustainable Me – and a rascal. Cole loves God but he likes his martinis dirty – “very dirty … Lindsay Lohan dirty” – and he confessed when his lawyer was out of earshot that if the server is one of those young women with a lot of tattoos, he has a follow-up joke too filthy for this newspaper.

He’s a big man – 6ft 2in – but with the otherwise gentle mien of an absent-minded professor. His grey hair is receding, his glasses have wire frames and his voice is high and softened by the accent of his native south. Although his memory can get fuzzy when it comes to his legal problems, he is an able raconteur. When he tells stories, he often plays all the characters – and does a wicked impersonation of his late mother, a proud daughter of Dixie, who taught him that the ways of Yankees “aren’t like our ways”.

Cole told me he came to Bakersfield to get away from a place called Eagle Springs, North Carolina. He grew up there poor – so poor he didn’t have indoor plumbing when he was a boy. He went away to Bob Jones University in South Carolina – a Christian school that is perhaps best known for having banned interracial dating until the year 2000 – but returned home to begin his life as a man. Cole became the principal at the local Big Oak Christian Academy in 1970, hired another Bob Jones product called Becky as a teacher (“part of a bigger plan”, he says), married her and became a father.

Things fell apart in 1988. Cole says it all started when he expelled three students for smoking pot. One of them, an 18-year-old boy, claimed he had engaged in a sex act with his principal. Charges were filed against Cole by authorities in North Carolina that March, his lawyer says, and although Cole denied them, he began to look for a job at Christian schools in other places. He found one in Bakersfield and took his wife and young sons there in June. But after he was convicted by a North Carolina jury and put on probation in October – for a felony charge described as a “crime against nature” – his career in Christian education was effectively over and he had to find a new life.

“It was tough times,” Cole says, adding that his wife told him that she would have divorced him if he had gone to prison. But he kept the faith, relying on “the Bible and God’s word and prayer”, as well as the lessons he learnt at university. Two adages of Bob Jones Sr proved especially inspirational. They were: “The test of your character is what it takes to stop you,” and “The door to success swings on the hinges of opposition.”

Bakersfield was a fitting place for Cole to start over. It has been giving Americans second chances since the Joad family came to the Weedpatch work camp, a few miles south of the city, in John Steinbeck’s Great Depression novel, The Grapes of Wrath. Bakersfield’s population has grown more than 10-fold since those days – to about 350,000 – as more of the “moving, questing people”, as Steinbeck called his displaced subjects, arrived.

People came to Bakersfield because it was the kind of place where they could make a living with their hands – in oilfields and farms and the businesses that grew up around them. About 100 miles north of Los Angeles, Bakersfield sits in Kern County, at the southern end of inland California’s resource-rich San Joaquin Valley. Kern has tens of thousands of active oil wells – Bakersfield High School sports teams are known as “the Drillers” – and has accounted for about 10 per cent of US oil production in recent years. Its farms sell billions of dollars of grapes, almonds, milk, citrus, pistachios, cattle, calves, carrots, hay, alfalfa, potatoes, pomegranates and other agricultural products.

These economic underpinnings make for a local culture tougher-minded than the touchy-feely variant on the sunny coast – as well as a population that is poorer and less well-educated. So many people came to Bakersfield as refugees from Dust Bowl states that by the 1950s, the area was a capital of country music – home of the “Bakersfield sound”. Made popular by artists such as Buck Owens and Merle Haggard, it was harder-edged than the syrupy offerings pouring out of Nashville, and it gave voice to the anger and anxieties of the poor and working-class. “I came here looking for something, I couldn’t find anywhere else,” Owens sang in his classic rendition of the song “Streets of Bakersfield”. “I don’t want to be nobody, just want a chance to be myself.”

Cole struggled at first to find himself – or a job – in Bakersfield. But it helped that he was a churchgoing man. He found the strength to share his story with a fellow parishioner, and that new friend gave Cole a job as an estimator for his roofing company. Bakersfield gets cold in the winter and the lanky Cole had to learn to keep his balance on icy roofs. But he didn’t fall, and he began to impress his colleagues. “They found out that I had a brain,” he says, and entrusted him with office work. Cole eventually got his real estate licence and for about the next decade, he worked in roofing and sold houses on the side, steering clear of trouble.

Cole didn’t go into real estate full-time until he got a go-ahead from God. It happened on a Sunday after church. The Coles had just finished eating at a buffet restaurant when Becky asked Carl if he had left a tip. He hadn’t, and she scolded him because the waitress had refilled his drink several times. So Cole headed back to their table – and heard a voice. “I heard somebody say, ‘Carl, Carl Cole,’” he says. It was Kyle Carter, owner of a real estate company where Cole had interviewed with another executive. “He said, ‘Hey, I heard you are coming to work for my company.’ I said, ‘You heard that?’”

To Cole, this was the sign – the one for which he had been waiting as he tried to decide whether to give up roofing entirely for the home-selling life. “When we sat down to eat and we prayed over our meal, I prayed that God would help me to know where to work,” Cole says. “So, that was the answer. You pray and he’s there. To me, it was just too obvious … The next day, I was working for him.”

Cole is worldly enough to know that this will sound strange to people who don’t practise his brand of Christianity. “But it is who I am,” he says. “I have to be who I am. And I’m not ashamed of who I am. It’s how I was raised. It’s what I believe – my faith.”

It was also the case that a man with Cole’s mindset wound up feeling right at home in the US real estate business of the first decade of the new millennium. Miraculous things seemed to happen to Cole with regularity. There were more curious coincidences, including one in 2001 that brought him face to face in the Kyle Carter offices with another young man who would change his life: David Crisp.

Cole had met Crisp several years earlier when he sold a house to his mother, Tu Crisp – an immigrant from Vietnam who had to raise seven children on her own after her husband was sent to prison for passing bad cheques, according to local press accounts. Tu had got into a dispute with the builder over carpeting for “the great room”, and David, then only a teenager, intervened while Cole observed. “[He] was cussing a blue streak and really standing up for his mom, which impressed me,” Cole says.

Crisp displayed the same gumption when he reappeared in Cole’s life. After finishing high school, Crisp had gone to work to support his family, waiting on tables at a Tex-Mex restaurant and unloading UPS trucks at night. But he strode across the floors of Kyle Carter’s office with confidence, approaching Cole right at the start to ask: “Remember me?” Cole did. “You raised a big stink,” he says he told Crisp. “And he [Crisp] said, ‘That’s me’ – and just smiled. He’s very outgoing, if you talk to him.”

A closer bond was forged a little later after Cole said he overheard Crisp talking on the telephone about his family’s financial problems. “It just hit him,” Cole says. “He got up and pushed the chair back and turned around and grabbed his coat and I saw tears just streaming down his cheeks. I sat there for a couple of seconds and I followed him into the parking lot.” Cole got to Crisp before he could drive away and asked the younger man if he needed money. Crisp resisted at first, but eventually said he “could probably get by with a couple of thousand”. Cole says he wrote him a cheque for $5,000.

“He just embraced me and thanked me and gave me a big thank-you hug,” Cole says. “I figured I had it to lose and I thought I might encourage somebody young.”

David Crisp, Cole’s 'cocky young partner'
David Crisp, Cole’s 'cocky young partner', during the good times © Henry A. Barrios

Thus was born the partnership of Crisp & Cole – two very different people who were both good at selling houses. The cocky Crisp would come up with crazy ideas and the conservative Cole would try to make them happen. They worked as partners for other people for several more years, and then set out on their own in 2005.

Their timing was amazing. The Bakersfield property market was on fire. House prices rose at a clip of more than 3 per cent – a month – on their way to reaching record highs in June 2006, according to statistics kept by the widely acknowledged guru of the local property market, a veteran appraiser called Gary Crabtree. Buyers, meanwhile, could get loans covering the entire cost of a home because banks wanted those mortgages so badly.

“There was a 100 per cent chance you would get a loan,” Cole says, adding that when his colleagues called lenders to discuss financing terms, they were told: “You know what, we can get your frickin’ dog a loan if you have a Social Security number.”

That might have given some financial executives pause, but Cole and Crisp weren’t the kind to argue with good fortune. Their attitude was perhaps best summed up by one of the Bible verses they discussed at sales meetings. “The Lord has done great things for us, and we are filled with joy,” goes Psalm 126:3. And so it went at Crisp & Cole: they counted their blessings.

Crisp & Cole became the face of the Bakersfield property boom. To display its homes for sale, the firm produced a television programme that ran several times a day. There were Crisp & Cole TV commercials, billboard messages and the walking, talking advertisement that was David Crisp.

Still only in his twenties, Crisp compared himself in the local newspaper to the Las Vegas casino tycoon Steve Wynn and barrelled around Bakersfield in a $560,000 Mercedes-Benz McLaren sports car, accompanied by a phalanx of bodyguards dressed in the dark suits that were de rigueur for all employees of the firm.

“We were aggressive and we created an image, which … is the first thing you have to do,” Cole says. “People came to us in droves. It was just phenomenal.”

It felt great because Crisp & Cole had become connected to a higher power – Wall Street. The firm sat at the local end of a global supply chain. Its scores of employees were creating hundreds of mortgages a year for banks, which were then packaging the home loans into securities sold to investors around the world – the ultimate source of most of the money used to fund US house purchases, then and now.

The conceit of the bankers involved in this trade was that the mortgages they were buying were a kind of commodity – like the crude coming out of a Bakersfield oil well. But the grist for the mortgage-backed securities mill was paper – and lots of it: income verification statements, appraisals and other documents prepared by human beings at firms such as Crisp & Cole.

This put local real estate people in a position to pull the wool over the eyes of Wall Street. If bankers wanted more mortgages, the folks at Crisp & Cole could make them. If there were no more qualified buyers, they could make them up. Working in lightly regulated corners of the business, these real estate pros knew how to massage information, call the right people and spread enough cash around to get the mortgages approved.

Crisp & Cole began paying straw buyers up to $20,000 each so they would pose as home buyers on loan application documents, federal prosecutors say. The properties were then flipped from “owner” to “owner”, generating fees for the firm and profits for people with pieces of the deals. “What we found is that local people with knowledge of how the system worked were taking advantage,” says Kirk Sherriff, an assistant US attorney in Fresno, California, where the case is being prosecuted.

People who know the Bakersfield property market say such practices were widespread. An investor class took shape that used proxies to obtain mortgages so they could ride the property wave. On his analysis of the transaction data Crabtree, the appraiser, estimates that 15 per cent of home sales in Bakersfield from 2004 to 2007 involved straw buyers. Legal aid lawyers say many of the people found living in foreclosed Bakersfield homes were tenants paying rent to straw buyers, whose names were on the utility bills.

“This is just the tip of the iceberg. We had other property flippers that were doing the same thing on a smaller scale,” Crabtree says. “What made this case was they had such a huge presence on TV and billboards.”

Cole remembers it as a time when money just seemed to be there for the taking – like the time his firm started a mortgage brokerage. Such companies provide loan-processing services, but Crisp & Cole formed one called Tower Lending because it saw a chance to pick up the 1 per cent loan origination fee that went to others. “We weren’t doing anything extra except we owned the company that was making the loan money,” Cole says. “We realised that on every deal we sold, we were giving up $5,000-$10,000 on commissions.”

Eventually, they aimed for the skies. Crisp came up with the idea of building a 30-storey tower before he was 30 and the ever-industrious Cole tried to make it happen. Through a contact from church, Cole met officials of the California State University system and began work on a deal to develop two 31-storey towers – with condominiums, shops and a hotel – on the Bakersfield campus, subject to Crisp arranging the financing.

FBI agents combing the Crisp & Cole office
FBI agents combing the Crisp & Cole office © Casey Christie

But Crisp let Cole down – and not for the last time. “It was going to make us $50m apiece,” Cole says, “but David couldn’t come up with money.” Nor could officials of his own firm provide Cole with the documents that he needed in 2006 to file his tax returns. He says he grew nervous about the business practices at Crisp & Cole and talked things over with his accountant, who told him “to call the FBI”.

Cole kept quiet because he was scared of what might happen if he didn’t. He was a man with a dark past and he feared that rocking the boat might cause others to expose it. All he did was quietly leave the firm he founded and watch his world crumble.

The FBI raided Crisp & Cole in 2007. The next year, Cole’s conviction was revealed in the Bakersfield Californian newspaper, and he and Crisp were stripped of their real estate licences. Federal prosecutors filed charges in 2011 and guilty pleas have followed from all but one of those charged.

Meanwhile, Bakersfield property prices plunged along with those across the US and the straw buyers stopped making payments, leaving the lenders with big losses – sometimes hundreds of thousands of dollars on a single home. For example, Crisp’s wife, Jennifer, pleaded guilty to obtaining a $1.3m mortgage in 2006 from SunTrust, an Atlanta bank, by falsely stating she had been working for her father’s accounting firm. She then bought a home from a Crisp & Cole official who had paid $615,000 for it two years before. The property was eventually foreclosed upon and sold in June 2008 for $510,000.

Cole expresses remorse for what happened and blames himself for not paying more attention to what Crisp and others were doing – particularly in the case of his son Caleb, who has pleaded guilty to being a straw buyer. But there is a part of Cole that still likes to think about the good times, when prices could only go up. He argues that many of the straw buyers were investors themselves, who just needed extra help – cash on the side – to qualify for loans so they could get a piece of the property action.

“People were coming to us and saying, ‘How can we get on the money train?’” he says. “We were helping a lot of people go from people who could make a payment on a house to people who could make a payment on a house and have a boat and have a new truck in their garage to pull it with and take it out to the lake. We thought: how cool.”

Carl Cole at the start of his hearing in 2009
Cole at the start of his hearing in 2009 © Henry A. Barrios

After the demise of Crisp & Cole, Cole says he began to feel like a pariah in Bakersfield – his face had appeared so often on local TV that kids would approach him while he waited in line at McDonald’s. Life at home got difficult because his long-suffering wife blamed him for their mounting financial woes and the legal problems of their son.

So Cole hit the road, renting a series of rooms in towns closer to the coast, including one in Malibu, where he says his fellow tenants included a film actor cheated by his manager and a former golf course owner from Ohio cheated by a business partner. Cole eventually returned to Bakersfield to attend to his legal affairs, but it’s uncomfortable. He doesn’t go to church for fear of being “what people remember when they leave” and there isn’t much to talk about with his wife, who still works as a school teacher to pay the bills. “We don’t have a very communicative situation,” he says. “She cooks for me.”

As befits a man of faith, Cole has plans for when he leaves prison. He hopes to head to northern California, where his younger son is being transferred, and get as far “off the grid” as he can. “I want to do as much as I can to save energy and save the environment,” he says. “I may not achieve it, but you always set goals higher than you can achieve or there is no point in setting them.”

But even Cole is beginning to wonder about what the future will hold. As we finish our meal, he confesses that bad things seem to happen to him every 20 years. When he was 20, both his parents fell ill and he had to leave Bob Jones for a semester and work in a textile plant while he took care of his family. At 40, he had his problem at the Christian school. And at 60, he did his part to bring down the world financial system.

“I figure when I’m 80, you can look me up again,” he says. “I figure at 80, I’ll be due another one. I may still be in jail then. I don’t know what trouble I can cause there.”

“I’ll make you a deal,” I tell him. “We’ll do this again when you are 80.”

“Give me your card, man,” Cole says with a laugh, as I hand him my details and we head out together into the winter chill of the San Joaquin Valley night.

Gary Silverman is the FT’s US national editor. To comment on this article, please email magazineletters@ft.com

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