Last update: October 21, 2010 - 8:27 PM

http://www.startribune.com/local/105493228.html?elr=KArks:DCiUHc3E7_V_nDaycUiD3aPc:_Yyc:aUoD3aPc:_2yc:a_ncyD_MDCiU

Hennepin County prosecutors allege the group conspired to steal millions through phony loans.

Hennepin County prosecutors have charged five people with felony racketeering in an alleged mortgage fraud and money laundering scheme centered on a St. Paul-based mortgage brokerage firm.

The five are accused of conspiring with one another to swindle lenders into providing millions in mortgage loans, splitting proceeds among themselves and defaulting on the loans. Of the 16 Twin Cities area properties purchased in connection with the scheme in 2006, all but one went into foreclosure.

A criminal complaint alleges that Eric Bernard (also known as Eric Shirpiro), 31, of Shakopee, purchased several homes in quick succession from buyers also involved in the scheme and aided by co-conspirators in the mortgage, banking, real estate and insurance businesses. Authorities allege that several of the conspirators worked for or in cooperation with Enzo Mortgage Group Inc., in St. Paul

The co-conspirators verified phony employment, income, residence and other information for Bernard so that lenders would give him money, the complaint alleges.

In several cases, part of the proceeds at closing were paid over to "Cire Building," supposedly for improvements negotiated as part of the sale. The complaint says that Cire was a "sham entity" created by Bernard.

The scheme also involved stealing the identity of a California man, creating a false paper trail to make him appear to be a legitimate buyer, and using that identity to obtain $1.8 million in loans on three properties, according to the complaint.

Charged, besides Bernard, were Stacey Harrold, 42, of Burnsville, David Schoenhofen, 42, of Prior Lake, Michael Hudalla, 44, of Mendota Heights, and Nicole Marie Schmidt (also known as Nicole Origas), 33, formerly of Lake Crystal.