4 From MN, WI Charged in Mortgage SchemeFour people from Minnesota and Wisconsin face racketeering charges in a multimillion-dollar mortgage fraud scheme that authorities said involved extensive and intricate false documents, including fake college transcripts, phony divorce decrees and the forged signatures of Minnesota judges.
By: Amy Forliti, Associated Press
MINNEAPOLIS (AP) — Four people from Minnesota and Wisconsin face racketeering charges in a multimillion-dollar mortgage fraud scheme that authorities said involved extensive and intricate false documents, including fake college transcripts, phony divorce decrees and the forged signatures of Minnesota judges.
The defendants swindled others to collect millions of dollars in proceeds from mortgage loans, according to a criminal complaint made public Wednesday. The complaint says the scheme operated from June 2009 through August 2010 and may have involved 136 properties in the Minneapolis-St. Paul area, and $23 million in federally insured loans.
Officials said that unlike subprime mortgages of the past, the federally insured loans require extensive documentation, so the level of forgery that went into creating the documents in this case was intricate. The defendants allegedly created false companies and pay stubs so straw buyers would look as if they were making a certain amount of income to qualify for loans. They also created fake college transcripts and fake divorce decrees, with forged signatures of state judges.
"We think this is the next wave of mortgage fraud-lender fraud cases," Hennepin County Attorney Mike Freeman said. "There's a level of sophistication here we didn't always see in subprime."
The criminal complaint charges Raul Burgos Pliego, 21, of Farmington; Alejandro Sanchez, 32, of Bloomington; and James Ober, 43, and Wendy Ober, 41, both of Hudson, Wis., with racketeering. The charge carries a penalty of between zero to 20 years in prison, and a fine up to $1 million if convicted.
Attorneys for the Obers and Pliego had not seen the complaint Wednesday and had no immediate comment. It was not immediately clear who was representing Sanchez and a home number for him was not available.
The investigation was initiated by the Department of Commerce, which is responsible for enforcing the state's laws governing some industries, including real estate and mortgage businesses.
In addition to the criminal charges, the defendants also could face civil penalties. The commerce department filed a civil action, requesting an administrative hearing to determine whether the defendants violated state laws governing real estate and mortgage industries.
Prosecutors and commerce officials say that as part of the scheme, the defendants took advantage of the depressed housing market and targeted homes in foreclosure. They focused on homes sold at sheriff's sales, and used the fake documents so straw buyers would qualify for loans they otherwise wouldn't get.
Then, they created a fake second mortgage against the property so that when the property was sold, they'd collect kickbacks. In just nine of the dozens of suspected transactions, prosecutors allege the defendants collected more than $840,000 in kickbacks.