April 22, 2011

http://minnetonka.patch.com/articles/three-charged-in-42-million-minnetonka-mortgage-fraud-scheme

According to the Department of Justice, a Minnetonka condo development was used in a multi-million dollar mortgage scheme.

On Thursday, three people were charged in federal court in St. Paul with orchestrating a scheme to defraud mortgage lenders out of approximately $4.2 million relative to a Minnetonka condo development.

Sheri Lynn Delich, 45, of Apple Valley, My Dinh Lam, 30, of Minneapolis, and Ashley Elizabeth Prasil, 26, of Eden Prairie, were each charged with one count of conspiracy to commit mortgage fraud. Delich was also charged with one count of money laundering.

From December 2006 through December 2007, the defendants allegedly conspired to defraud mortgage lenders in connection with the marketing of Minnetonka's Cloud 9 Sky Flats development (“Cloud 9").

The defendants allegedly found buyers to apply for mortgage loans to purchase units in the development—the defendants and the buyers both allegedly knew that each buyer would receive a kickback of approximately 30 percent of the reported purchase price of any unit.

The forms submitted to the lenders reportedly did not disclose the kickbacks to buyers. The kickback payments were allegedly then returned to the buyers through an account controlled by Delich and funded with loan proceeds.

Once she received kickback money, Delich allegedly skimmed off a percentage of it for herself and others and then delivered the balance to the appropriate buyer. She did not disclose these payments to the lenders.

More than 40 Cloud 9 units were sold through the scheme, and more than 80 percent of those loans have since defaulted. In excess of $4.2 million was transferred to accounts allegedly controlled by Delich. As for the money laundering charge, Delich is alleged to have accepted a wire transfer of $120,123 in fraud proceeds.

If convicted, the defendants face a potential maximum penalty of five years in prison, and Delich faces a potential maximum penalty of 20 years for money laundering. All sentences will be determined by a federal district court judge.

This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant United States Attorney Robert M. Lewis.