Thomas John Hunter, 30, Maple Grove, Minnesota, part owner of Legacy Lending, pleaded guilty to participating in a mortgage fraud scheme that involved 37 separate real estate transactions and $20 million in loan proceeds. Hunter pled guilty to one count of wire fraud and one count of money laundering in connection to this crime. He was charged via information on January 26, 2010.
In his plea agreement, Hunter admitted that from September 2005 through July 2007, he and others carried out a fraud scheme, through which mortgage loans were obtained from unsuspecting lenders by straw purchasers, in amounts far exceeding actual purchase prices, based on inflated property appraisals. Hunter also admitted that during the course of this scheme, he and others failed to inform lenders that funds in excess of the actual property purchase prices were misappropriated by those involved in the fraud scheme, and that concealed payments were made out of loan proceeds to participants in the scheme.
To further the scheme, Hunter and others caused fraudulent loan applications to be provided to potential lenders in which property purchasers were falsely identified and property was falsely described as “owner occupied” when in fact each straw buyer was purchasing multiple properties at the same time. In application materials submitted to lenders, the defendant and others also inflated 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.
Specific 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.
For his crimes, Hunter faces a potential maximum penalty of 20 years in prison on the wire fraud count and 10 years on the money laundering count. United States District Court Judge Richard H. Kyle will determine his sentence at a future date.
This case is 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. Attorneys Timothy C. Rank and Christian S. Wilton.
One of Hunter’s co-conspirators, Frederick Earle Deen, 30, of Minneapolis, Minnesota who also had part ownership interest in Legacy Lending, is scheduled to be sentenced this for his role in the fraud scheme. Another co-defendant, Taylor Trump, was sentenced for his involvement in this crime on August 21, 2008.