Updated: 03/28/2011 01:10:25 PM CDT

http://www.twincities.com/ci_17718479?nclick_check=1

A longtime member of the White Bear Township board pleaded guilty to mortgage fraud and money laundering today.

Richard A. Sand, 59, has yet to be sentenced, but could face up to nearly five years in federal prison.

He will lose his spot on the three-person township board, a post he has held almost continually for 36 years, said town clerk Bill Short.

Sand's admission came as part of a plea agreement with federal prosecutors and was made during a hearing this morning in U.S. District Court in Minneapolis.

Sand was initially indicted on three counts of mortgage fraud and 11 counts of money laundering.

He did not comment on the plea agreement this morning.

His attorney, Peter Wold, described his client's predicament as an investment opportunity gone bad. He said Sand was in a tight financial situation — his law office property on Nina Street in St. Paul was in foreclosure — when he entered into the property deal in 2008. He intended to repay the loans within a year but was swamped when property values declined, Wold said.

"Dick took responsibility for his role here and wanted to do that and get this behind him," Wold said. "Obviously the manner in which the loans were obtained, he takes responsibility."

According to prosecutors, Sand, along with Donald W. Krause of Plymouth and Brenda Epperly of Oak Grove, crafted a home-purchase deal on a $1.6 million house in Orono in ealry 2008. The next day, the home was sold to Sand's mother, the now-86-year-old Antoinette Sand, for $2.6 million.

The loan application for the sale, totaling $2 million, grossly inflated Antoinette Sand's income figures and claimed she would bring about $600,000 earnest money to the closing, Sand admitted in court.

The Sands had no money to bring to the closing — the $600,000 would come from two $1 million loans the trio secured from Bank of America and already sent to Epperly ahead of the closing.

Epperly then gave $900,000 to Krause, who then purchased two cashier's checks — one for about $600,000 for the closing and another for more than $224,000 to get Sand's Nina Street law office out of foreclosure, according to testimony today. Another $170,000 was deposited into a bank account used by Sand.

Bank of America ultimately lost $1.1 million on the fraud, according to the indictment.

Assistant U.S. Attorney James Lackner questioned Sand during the hearing, having the defendant detail the crime.

"The point was to get the transaction done so you could get cash back. Is that correct," Lackner asked.

"Yes," replied Sand, who stood next to Lackner at a podium in the 12th floor courtroom.

"The purpose of this was to get money to get out of economic stress?" Lackner asked.

Yes, Sand said.

"You intended to defraud the bank with these actions. Is that a fair statement?" the prosecutor asked.

"It's a fair statement," said Sand.

General sentencing guidelines call for three years and 10 months to four years and 9 months in prison for Sand, a $10,000 to $100,000 fine and three to five years of supervised release, Judge Joan N. Ericksen said.

Sand's Nina Street property — the site he was attempting to save with the mortgage fraud — will be forfeited.

Wold said he and Sand had planned on taking the case to trial up until a week ago, but Sand decided to take a plea agreement when codefendant Krause started cooperating with prosecutors.

Sand will be sentenced at a later date. He remains free on supervised release.

Both of Sand's codefendants reached plea agreements with prosecutors and appeared in court this morning, too. Krause pleaded guilty to one count of mortgage fraud and one count of money laundering. Epperly pleaded guilty to one count of mortgage fraud. Both have yet to be sentenced.

Short, township clerk, said Sand called him after the hearing to tell him about the guilty plea. Short said he was going to meet with the town attorney and the two other town board members today to determine how to proceed. The board could take action on Sand's board status during an organizational meeting slated for April 4.