Two people have been accused of white collar crime relating to a Minnesota condominium project. The two individuals were charged by the U.S. Attorney’s office in Minneapolis with wire fraud and conspiracy to commit money laundering.
Law enforcement officials believe the pair was receiving kickbacks in a scheme to defraud mortgage lenders of $14 million dollars in the Cloud 9 Sky Flats project. Officials connected to the case said the pair secured buyers to apply for mortgages to purchase units in the Cloud 9 development. They maintain the buyers were of the understanding that they would be getting a 25 to 30 percent kickback from the price used to establish the loan. A total of more than 40 units were sold using the scheme.
The two men are facing possible prison terms of 20 years each for money laundering and additional 20 years each for the 22 counts of wire fraud. One of the men has also been charged with witness tampering and for trying to coerce the other into lying to authorities. The additional charge could also mean another 20 years in prison added to penalties for the other crimes.
Attorneys were unable to be reached to make any comment. The project developer did say that he has known one of the men for two decades and believed him to be honest. To date, the case has resulted in the arrests of five individuals of which three have already entered guilty pleas in court.
The real estate developer behind the Cloud 9 building project has recently come out of bankruptcy. Federal investigators conducted a raid of his headquarters last February but have not charged him with a crime. The developer has denied any involvement in the fraud and money laundering activities.
Source: Star Tribune, “Two more indicted in Cloud 9 condo fraud,” Jackie Crosby, Sept. 15, 2011