Local Real Estate Agent Pleads Guilty in $10M Fraud

Barbara Puro and co-conspirators-several of whom have been sentenced for their role in the crime-operated a mortgage fraud scheme that allegedly involved more than $10 million in fraudulent loans.

Barbara Puro, a former real estate agent from Savage, admitted Wednesday to participating in a mortgage fraud scheme that defrauded lenders from across the country out of millions of dollars, Minnesota's U.S. Attorney's office said.

Puro pleaded guilty to one count of conspiracy to commit wire fraud. She was indicted in September, and she faces up to 20 years in prison.

Prosecutors allege that between 2005 and 2008, Puro conspired with others to fraudulently obtain loan proceeds. She was employed by HomStar USE, ReMax Advantage Plus, and Coldwell Banker Burnet during that period.

Puro “routinely produced fraudulent documentation for lenders and title companies,” and she arranged for homeowners to sell their properties to straw buyers at inflated prices, the U.S. Attorney's office said. She then gave the difference between the amount paid to the seller and the inflated sale price to her co-conspirators.

Puro also allegedly earned “substantial real estate commissions that exceeded industry standards.”

For example, the indictment states that Puro and her co-conspirators sold a property in Prior Lake to a straw buyer for $1.2 million, when the seller had agreed to sell the property for only $860,000. Puro then created fraudulent mortgage documents, ultimately resulting in about $300,000 being sent from the title company to TRAE, a company controlled by Puro. She transferred about $265,000 to a co-conspirator, and used the remaining funds for personal expenditures. She also received $13,403 in commission on the deal, according to the indictment.

The property subsequently went into foreclosure, and the lender lost about $571,759, according to the U.S. Attorney's Office.

In all, Puro and her co-conspirators sold about 22 properties to straw buyers-resulting in fraudulent loans of more than $10 million and losses to lenders totaling roughly $5.3 million.

Several co-conspirators have already been sentenced for their roles in the scheme. Zack Dyab of Golden Valley and Julia Rozhansky of Minnetonka pleaded guilty in 2010. In September 2011, Dyab was sentenced to 10 years in prison, and Rozhansky received a five-year sentence.

Last July, Larry Hutchinson was sentenced to one year and nine months in prison, and Jerone Mitchell received a one-year sentence for his role in the fraud scheme. Ericvan McDavid is scheduled to be sentenced on March 30.