MN Real Estate Execs Indicted for $1.8M Fraud Scheme

Ryan Daryl Krutzig of Maple Grove and Jesse Scott Hoffman of St. Cloud allegedly obtained mortgage loan proceeds through fraudulent means and concealed payments made to themselves.

A Minnesota real estate appraiser and real estate agent were indicted Thursday in federal court in connection with a $1.8 million mortgage fraud scheme involving 28 properties.

Ryan Daryl Krutzig, 31, of Maple Grove and Jesse Scott Hoffman, 32, of St. Cloud were each charged with five counts of wire fraud for their alleged roles in the scam. Krutzig was additionally charged with four counts of mail fraud and two counts of money laundering.

According to the U.S. Attorney's Office in Minnesota, Krutzig owned and operated US Appraisal Management in Maple Grove, and Hoffman worked at Stellar Realty.Between 2005 and 2007, the two men allegedly used straw buyers to purchase real estate for which mortgage loans were obtained for significantly higher sums than the true value of the properties. Hoffman allegedly acted as the straw buyers' “agent” in numerous transactions and facilitated the deals even though he knew they were fraudulent.

Krutzig is accused of inflating appraisals and then providing them to potential lenders for loan underwriting. In return, he allegedly received payments additional to his regular appraisal fees. He acted as a buyer and seller of several properties, but his ownership interest in them wasn't disclosed to lenders, according to the U.S. Attorney's Office.

Krutzig and co-conspirators allegedly created a sham corporation called Accelerated Services and used its business account to conceal the diversion of loan proceeds from lenders.

Among those who aided Krutzig and Hoffman in the fraud scheme were Thomas Hunter and Frederick Deen, co-owners of mortgage brokerage company Legacy Lending. Last year, both were sentenced to prison for their roles in the fraud scheme.

If convicted, Krutzig and Hoffman both face a potential maximum penalty of 20 years in prison on each wire fraud count. Krutzig also faces up to 20 years on each mail fraud count and 10 years on each money laundering count.