Three charged in real estate fraud case

Hennepin County officials say a real estate development company called 10Spring Homes is at the core of the alleged scheme.

They say 10Spring bought vacant land parcels, only to quickly resell them at substantial markups to investors. Prosecutors say 10Spring and its agents lured these investors into the purchases -- telling them that, in exchange for using their names on the mortgages, they'd be paid thousands of dollars.

10Spring would to cover the monthly payments on the land until it could sell off the parcels again, at which point the investor would be finished with the deal.

Assistant Hennepin County Attorney Tom Fabel says 10Spring, and what prosecutors are calling a facilitator, lured investors with the age-old promise of easy money.

"What we try to do ... is to go after the biggest fish we can find and the person who's causing the most harm. It's clear these three individuals are that."

"Just the old line, it's easy money to be made," Fabel says. "'Come on in. Work with us. We have this thing well in place. Money is going to be obtained on loans up front. We're going to divide it up, and down the road we're going to be able to cover those loans by selling the property.' So it's the get rich quick scheme."

Fabel says the transactions were illegal because 10Spring was essentially acting as the seller and buyer. The investors recruited to participate were essentially "straw buyers," participating in name only, but shouldering 100 percent of the risk.

Additionally, prosecutors say the scheme relied on a corrupt mortgage broker who, with the help of 10Spring, falsified loan applications to ensure 10Spring could get mortgages for the investors.

"So right at the very beginning of the transaction you have a company that acquired property. It gets more money for it than they had originally invested in the property, and then is able to go forward with that property -- perhaps developing it down the road, perhaps recovering the money that was obtained from the bank, perhaps being able to take the straw buyer off the hook, but maybe not," says Fabel.

The Hennepin County Attorney's office says it found out about the alleged scheme just last month, after one of the investors came forward when a check bounced.

They've charged 10Spring owner Scott Rosenlund, mortgage broker Celeste Skaar, and the alleged facilitator Shinon Lindberg, with racketeering and seven counts of theft by swindle.

Phone calls placed to Rosenlund and Skaar were not returned. Lindberg answered his phone, saying he was unaware of the Hennepin County news conference. He said he would return the call but did not.

Hennepin County Attorney Mike Freeman says each of the eight counts carries the possibility of 20 years in prison and substantial fines.

Freeman says the investors who bought into the easy money scheme will not be charged because they were lured into it, and will have enough trouble rebuilding their credit when the loans they cannot pay are foreclosed on.

"They are cooperating. And what we try to do, particularly in financial crimes, is to go after the biggest fish we can find and the person who's causing the most harm," Freeman says. "It's clear these three individuals are that."

So far prosecutors say they've identified two investors who owe upwards of $2.5 million on land valued well below that amount. In both cases, officials say the investors whose names are on the mortgages cannot afford to repay their loans.

Officials say their investigation is continuing, that they expect to identify more investor-victims, and that the amount of money involved is likely to increase. They say they announced the scam this early in their investigation in an effort to stop any further fraudulent activity.

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