September 9, 10

NEWS / Owner of Legacy Lending Sentenced for Participating in $20 Million Mortgage Fraud Scam

The 31-year-old part owner of Legacy Lending was sentenced yesterday in federal court in St. Paul for participating in a mortgage fraud scheme that involved 37 separate real estate transactions and $20 million in loan proceeds. United States District Court Judge Richard H. Kyle sentenced Thomas John Hunter, of Maple Grove, to 40 months in prison on one count of wire fraud and one count of money laundering in connection to the crime. He also was ordered to pay $228,711.43 in restitution. Hunter was charged on January 26, 2010, and pleaded guilty on March 2, 2010.

In his plea agreement, Hunter admitted that from September 2005 through July 2007, he and others carried out a scheme through which fraudulent mortgage loans were obtained from unsuspecting lenders. The loans were based on inflated property appraisals and far exceeded the actual purchase prices of the properties involved. Hunter also admitted that he and others failed to inform lenders that the funds in excess of the actual purchase prices were misappropriated by those involved in the scheme.

Specifically, Hunter and others caused fraudulent loan applications to be provided to potential lenders. Those applications falsely described the properties to be purchased as “owner occupied,” when, in fact, straw buyers were purchasing multiple properties at the same time. Hunter and others also misrepresented the income and assets of potential borrowers, and a licensed real estate appraiser involved in the fraud scheme created inflated appraisals of the properties to support the fraudulent loan amounts. The defendant participated in 37 separate fraudulent real estate transactions, worth approximately $20 million in total loan proceeds, from which at least $2.2 million was received by participants in the scheme through illegal, concealed payments.

As to the charges filed against him in this case, Hunter admitted that on April 20, 2006, he and others engaged in an illegal wire transaction when they obtained $825,000 in mortgage loan financing for the purchase of a residence in Rogers, Minnesota. Hunter also admitted that from those funds, he and his co-conspirators misappropriated at least $110,000. In addition, Hunter admitted that on April 21, 2006, he engaged in an illegal monetary transaction when a check in the amount of $13,2000, representing proceeds from the fraud, was deposited into a Legacy Lending bank account.

This case was the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It was prosecuted by Assistant U.S. Attorney Timothy C. Rank.

One of Hunter’s co-conspirators, Frederick Earle Deen, age 30, of Minneapolis, who also had part ownership interest in Legacy Lending, was sentenced on March 5, 2010, to 24 months in prison on one count of wire fraud and one count of tax evasion. Another co-defendant, Taylor Trump, was sentenced on August 21, 2008, to 84 months on one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering.

http://minneapolis.fbi.gov/dojpressrel/pressrel10/mp090810a.htm

Tags: criminal investigation,