Two Chisago City men received multi-year prison sentences on Monday for executing a mortgage fraud scheme involving more than 30 Minnesota homes, according to Minnesota’s U.S. Attorney’s Office.
Chad Arthur Anderson and Troy Allen Huston—both of whom served as loan officers for White Bear Lake mortgage brokerage firm Prestige Mortgage—were indicted last April and pleaded guilty in August, each to one count of conspiracy to commit mortgage fraud through the use of interstate wires.
Anderson received a five-year prison sentence, while Huston was sentenced to four years and nine months. The men were also ordered to pay more than $4.8 million in restitution.
Between 2006 and 2007, the men recruited friends and relatives to act as “straw buyers” to purchase Twin Cities homes, the U.S. Attorney’s Office said. In such schemes, fraudsters often lie on loan applications for straw buyers in an effort to obtain higher loan values, knowing that the buyers do not intend to keep the property. The two Chisago City men admitted in their plea agreement that, in their roles as loan officers, they submitted false loan applications to lenders on behalf of the straw buyers in order to broker fraudulent deals, according to the U.S. Attorney’s Office.
The scam involved a total of 32 Minnesota homes, including properties in Otsego, Oak Grove, Elk River, St. Francis, Brooklyn Park, Isanti, St. Paul, Chisago City, Becker, Cambridge, Buffalo, Minneapolis, Zimmerman, and Albertville.
During the scheme, the men were also associated with a Chisago City company called Lofton Property Management, according to the U.S. Attorney’s Office. They used the Lofton name on invoices in order to obtain loan proceeds for property management services that were never actually provided—and they kept the money for themselves, the straw buyers, and others participating in the fraud scheme.
All of the mortgage loans associated with the fraud scheme have gone into default, causing mortgage lenders to lose more than $2.5 million, the U.S. Attorney’s Office said.