Michael Prieskorn, mortgage originator, has had his license revoked by the Minnesota Department of Commerce, who also fined him $2.2 million, for his involvement in the fraudulent sale of approximately 220 homes in new developments in high-growth areas including Eagan, Buffalo, Rochester and St. Cloud, Minnesota. Commerce investigators have been unable to contact or locate Prieskorn and he failed to appear at an administrative hearing on the matter on December 17, 2008.
The department charged Prieskorn with participating in a fraudulent scheme involving numerous investors who were induced to purchase approximately 220 homes at prices substantially above their market value. The scheme is referred to as a “builder bailout” with most of the homes coming from the excess inventories of new homes belonging to local builders.
The homes involved were mostly in the fast growing areas of Eagan, Buffalo, Elk River, Oak Grove, Maple Grove, Delano, Otsego, Rochester and St. Cloud, Minnesota.
Selling the homes at inflated prices allowed the sellers to make substantial profits and allowed Prieskorn‘s company, Maine Estates, to collect “management fees” ranging from $22,000 to $105,000.
In addition to Prieskorn, the Minnesota Department of Commerce has taken action against several other licensees who worked with Prieskorn in this fraudulent scheme:
In July 2008, the department revoked the real estate salesperson license of Michael Robert Bohn and permanently barred him from the mortgage originating industry in Minnesota. Bohn was charged with originating 70 to 80 loans involving straw buyers, promising that Prieskorn‘s company, Maine Estates, would arrange renters for the properties and then resell them at a profit after one year.
In November 2008, the department retroactively revoked the mortgage originator license of Vista Mortgage and permanently barred owner Kim David Norling from engaging in residential mortgage originating or servicing. The department also revoked Norling‘s real estate salesperson license. Bohn worked under the license of Vista Mortgage while he set up straw buyers for 70 to 80 homes at inflated prices, paying substantial fees to Maine Estates and kickbacks to the buyers and sellers.
In June 2008, the department revoked the real estate salesperson license of Peter Douglas Lyle and permanently barred him from engaging in residential mortgage originating or servicing for his participation in the scheme to defraud mortgage lenders and servicers.
In May 2008, the department retroactively revoked the mortgage originator license of Expert Mortgage and permanently barred owner Guy Abernathy from engaging in residential mortgage originating or servicing for his participation in the scheme to defraud mortgage lenders and servicers.
Instead of keeping up on the mortgage and utility payments, the Department charges that Prieskorn spent the money himself. In April 2007, Prieskorn emptied his bank accounts, stopped making payments and did not purchase any of the investors’ homes as promised. Most of the homes have fallen into foreclosure.
“This is the kind of behavior that drives up foreclosures and completely destroys the market value of entire neighborhoods,” said Commerce Commissioner Glenn Wilson. “We will continue to untangle these complex cases and take action against those who don’t follow the law. We will also continue to work with local, state and federal prosecutors to put people in jail for criminal activity.”