MINNEAPOLIS—Yesterday in federal court,
two mortgage loan officers pleaded guilty to recruiting straw buyers to
purchase properties at inflated prices and then distributing the excess loan
funds among themselves, the straw buyers, and others involved in the scheme.
Chad Arthur Anderson, age 38, and Troy Allen Huston, age 42, both of Chisago
City, pleaded guilty to one count of conspiracy to commit mortgage fraud
through the use of interstate wires. The two were indicted on April 3, 2012,
and entered their pleas before United States District Court Judge Joan N.
Ericksen.
In their plea agreements, the defendants
admitted that from 2006 through 2007, they recruited others, mainly relatives
and friends, to act as straw buyers for the purchase of homes in the Twin
Cities. At the time, the men worked as loan officers at Prestige Mortgage, a
mortgage brokerage company in White Bear Lake, where they brokered numerous
fraudulent mortgage loans by submitting false loan applications to prospective
lenders. Anderson admitted to recruiting five straw buyers to purchase 17 homes
during the course of the scheme, while Huston admitted to recruiting an
unspecified number of buyers to purchase additional homes. The scheme involved
a total of 32 homes in Minnesota. The properties involved are located in
Otsego, Oak Grove, Elk River, St. Francis, Brooklyn Park, Isanti, St. Paul,
Chisago City, Becker, Cambridge, Buffalo, Minneapolis, Zimmerman, and
Albertville. All of the mortgage loans involved have gone into default, causing
losses to the mortgage lenders that exceed $2.5 million.
At all times relevant to this case,
Anderson and Huston were also involved in Lofton Property Management, a
property management company in Chisago City. They used Lofton’s name on
construction invoices and other statements to obtain loan proceeds for property
management services never provided. In addition, they used Lofton’s name on
property settlement statements, thereby receiving fraudulent mortgage loan
proceeds, which they disbursed among themselves, the straw buyers, and others
involved in the scam.
At the same time, Huston was involved in
YES Financial, a property finance company in Chisago City. Through that
company, he received additional, illicitly acquired loan proceeds. Moreover, he
arranged for a colluding appraiser, who offered appraisals to support the
inflated prices of the properties. He also prepared false loan applications on
behalf of the straw buyers, often overstating their income, misrepresenting
their employment, and failing to disclose their other mortgage obligations or
the true source of their down payments.
For their crimes, the defendants face a
potential maximum penalty of five years in prison. Judge Ericksen will
determine their sentences at a future hearing, yet to be scheduled.
This case is the result of an
investigation by the Federal Bureau of Investigation. It is being prosecuted by
Assistant U.S. Attorney David J. MacLaughlin.
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