St. Cloud real estate agent indicted in fraud schemeA St. Cloud real estate agent and a Maple Grove, Minn., real estate appraiser have been indicted in connection with a $1.8 million mortgage fraud scheme.
By: Kari Petrie, St. Cloud Times / MCT
MINNEAPOLIS -- A St. Cloud real estate agent and a Maple Grove, Minn., real estate appraiser have been indicted in connection with a $1.8 million mortgage fraud scheme.
Jesse Scott Hoffman, 32, of St. Cloud and Ryan Daryl Krutzig, 31, of Maple Grove were indicted Wednesday in federal court in Minneapolis. The scheme involved 28 properties, according to a news release.
Both were charged with five counts of wire fraud. Krutzig also was charged with four counts of mail fraud and two counts of money laundering.
Krutzig owned and operated US Appraisal Management in Maple Grove; Hoffman worked at Stellar Realty.
Court documents say that from 2005 through 2007, the men profited from fraudulent mortgage loans. Documents say they also concealed payments to themselves from those proceeds by diverting them to buyers and others, including Thomas Hunter and Frederick Deen, co-owners of Legacy Lending, a mortgage brokerage company.
During the course of the scam, Krutzig and Hoffman recruited straw buyers to purchase real estate for which mortgage loans were obtained for dollar amounts substantially larger than the true values of the properties involved, according to documents.
Documents say Hoffman acted as the straw buyers' agent in numerous transactions, knowing they were fraudulent.
Documents say Krutzig inflated appraisals, which he then provided to potential lenders for loan underwriting. In return, he received concealed payments in addition to his regular appraisal fees. Krutzig also acted as a buyer and a seller of several properties, but his ownership interest in those properties was never disclosed to lenders, according to documents.
Krutzig and others also created a sham corporation, Accelerated Services, and used its business account to conceal from lenders the diversion of loan proceeds, authorities believe.
Hunter and Deen, along with others, knowingly provided fraudulent loan applications to lenders, court documents say. The applications concealed the fraudulent payments that were to be made from the loan proceeds to Krutzig and Hoffman, the straw buyers, and others.
In March 2010, Deen, 31, was sentenced to 24 months in prison for his role in the scheme. In September 2010, Thomas, 31, was sentenced to 40 months in prison.
This case was investigated by the FBI.
Distributed by McClatchy-Tribune Information Services.