8th Guilty Plea Entered in $14M Cloud 9 Mortgage Fraud
An Eagan man pleaded guilty Wednesday to a single count of mail fraud in connection with a mortgage scheme involving the Cloud 9 Sky Flats condo development in Minnetonka, according to the U.S. Attorney’s Office in Minnesota.
Joseph Steven Meyer, 47, is the eighth person to enter a guilty plea in connection with the fraud, Attorney’s Office spokeswoman Jeanne Cooney told Twin Cities Business on Thursday. Nine people have been charged.
Meyer entered his guilty plea in U.S. District Court in St. Paul. He will be sentenced at a later date.
Meyer and other co-conspirators are accused of providing false information to mortgage lenders and defrauding them of $14 million in conjunction with the Cloud 9 development—a project of bankrupt St. Paul developer Jerry Trooien, who has not been charged.
Buyers who applied for mortgage loans for Cloud 9 units allegedly received kickbacks totaling 25 to 30 percent of the purchase price, and those involved in the fraud scheme allegedly kept some illicit mortgage loan proceeds for themselves as well.
More than 40 Cloud 9 units were allegedly sold through the scheme, and more than 80 percent of the loans have since defaulted.
In September, Meyer was charged in a federal indictment with numerous counts involving wire fraud, money laundering, and witness tampering—and he was scheduled to go to trial in July. Cooney said Thursday that the September indictment will be dismissed.
Meyer faces up to 20 years in prison for the mail fraud charge to which he pleaded guilty. Cooney noted that the earlier charges that were dropped won’t necessarily decrease the length of his sentence, as many white-collar criminals serve sentences for multiple counts concurrently rather than consecutively.
Jared Mitchell Rothenberger, 43, of Minneapolis is the only person charged in the Cloud 9 fraud scheme who has not entered a plea. He’s awaiting trial, and last month, he was indicted for another mortgage fraud scheme tied to the Chateau Ridge condo development in Burnsville.