Minneapolis – The alleged fraud involved 134 properties, 118 of which are now in foreclosure, across several counties, according to the Hennepin County charges.
Seven Twin Cities men face two racketeering charges each in an alleged $40 million mortgage fraud scheme that stretched across several counties with a focus on new developments in exurbs.
Facing identical charges are Brandon S. Flavin, 33, of Brooklyn Park, Nathan J. Nordvik, 27, of Wayzata, Jonathan Matheson, Brian Matheson, Richardt Fleischmann of Woodbury, John David Searle of St. Paul and Burton Edward Joseph of St. Paul.
Lawyer Steve Meshbesher said Nordvik will plead not guilty. “The allegations are not true as to him. He plans on putting up a vigorous defense,” Meshbesher said.
Attempts to reach the other men and/or their lawyers were not successful.
Beginning in December 2005, the seven worked through the National Investment Group Inc., American Wholesale Lending LLC, Innovative Personal Solutions LLC, Investment Property Advisors Inc. and United Management Group. The 15-page complaint against the men details a sprawling scheme initially uncovered by the Minnetonka Police Department.
“The scheme provided a stream of illicit profit, commissions, fees and kickbacks to the defendants,” the complaint said. Prosecutors estimated the men received at least $6 million from their alleged swindles.
Hennepin County Attorney Mike Freeman called it the largest mortgage fraud case so far, involving 134 properties, 118 of which are now in foreclosure. The allegedly fraudulent paperwork originated in Hennepin County, although the homes were in Chisago, Isanti, Wright, Sherburne, Anoka, Hennepin, Dakota and Carver counties. Otsego took the hardest hit, with 89 homes involved. Anoka and Dakota counties each had 11 properties, he said.
“It’s the classic mortgage fraud,” Freeman said. “Straw buyers, falsified mortgage applications and falsified income.”
The defendants would approach developers, offer a low-ball price for unsold homes or land, then take over the marketing and sale of the home, Freeman said.
The defendants lured in straw buyers with ads saying, “If you’ve got good credit, we can help you make money,” Freeman said.
The purported buyers and the defendants would receive cash, usually thousands of dollars, when the home sale closed. The buyers would be told the mortgage on the home would be covered by people who would live in the homes under rent-to-own arrangements, but eventually they would find that to be false, the complaint said. The homes would then typically end up in foreclosure.
The new twist involved the targeted areas — new homes in developments that sprung up during the boom, Freeman said. One straw buyer had four homes in his name on one Otsego street, claiming to be using all of them as a primary residence.

The men are to appear in court at 1:30 p.m. on May 5.

ROCHELLE OLSON, Star Tribune

A Jackson County judge sent a man involved with a mortgage fraud scheme to jail Thursday for at least 90 days.

Circuit Judge Thomas Wilson also placed Freddie Young Jr. on probation for three years. As a condition of the probation, Young cannot apply for a mortgage or engage in any real estate transactions without the court’s written approval.

Young, 45, of Jackson pleaded guilty in February to two counts of using false pretenses to acquire more than $20,000. In exchange for his plea, the prosecutor’s office dropped a third false pretense count and a racketeering charge.

Young said he paid a woman to forge tax forms so a man who was not qualified for a house loan could get mortgages.

Assistant Prosecutor Nick Mehalco Jr. alleged Young worked with several others to cheat companies into giving homes loans for over-valued Jackson properties using doctored documents. The mortgages would then go unpaid.

He was linked to Angelo Williams, 46, of Jackson, who is now in prison for scamming mortgage companies.

Such scams negatively impact the economy, Mehalco said. “It is a cancer on our community.”

Young said he takes full responsibility for his actions. “I shouldn’t have let other people force me to do something I kind of knew was wrong,” he said.

Wilson said he got many letters about Young and his community activities, which include work with youth sports leagues. His lawyer said he works two jobs.

“You’ve done a lot of positive things out there,” Wilson said.

The judge also said Young had to do 150 hours of community service.

If he fails to comply with all court orders and conditions, he could spend more time in jail.

Young and others were arrested and charged as part of a county effort to nab those involved in mortgage fraud.

Almost $74,000 seized earlier from Young as part of an investigation is to be held in an escrow account until victims, if any, can be identified, Mehalco said.