Stillwater Couple Federally Indicted for Orchestrating $5 million Mortgage Fraud Scam
A federal indictment alleges that the Stillwater couple defrauded lenders out of $5 million, while using some of the fraudulent proceeds to live in a Hastings home while enjoying a Spicer Lake vacation home.
A Stillwater couple was indicted today in federal court in connection with a $5 million straw-buyer mortgage fraud scheme.
James Warren Hoffman, 51, and his wife, Teresa Gay Hoffman, 52, were indicted on one count of conspiracy to commit mortgage fraud through the use of interstate wire and nine counts of mortgage fraud through interstate wire.
According to the indictment, the couple lived in a home in Hastings for seven years (from August 2001-2008) without ever owning it. Prosecutors allege that James Hoffman arranged for a series of straw purchasers to buy the property entirely with the proceeds of fraudulent loans.
The couple also allegedly used a Spicer Lake property as their vacation home (from From June 2001 through 2008) without ever owning it by also arranging fraudulent mortgage loans for a series of straw buyers.
The Hoffmans allegedly recruited—and arranged—for straw buyers to purchase real estate in both Minnesota and Wisconsin with the proceeds of fraudulent mortgage the indictment states. The Hoffmans allegedly owned several entities, which arranged financing for the fraudulent transactions.
Starting in June 2006, the indictment states that the couple—through three of their (unnamed) businesses—purchased apartment buildings in Rochester, Sauk Rapids and Spicer to convert them into condominiums.
They allegedly sold the condos to straw buyers, who paid for them with proceeds of fraudulent mortgage loans arranged by the Hoffmans. Prosecutors allege the estimated loss to mortgage lenders is about $5 million.
The indictment alleges that from James Hoffman hatched, conspired against and defrauded lenders with the scam from August 2001 through 2009. Teresa Hoffman allegedly began participating in the scheme in August 2006.
If convicted, the Hoffmans each face a maximum penalty of 20 years in prison on each mortgage fraud count and five years on the conspiracy count.
This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant United States Attorney David J. MacLaughlin.