A Minneapolis federal jury recently convicted a man who was part of a conspiracy to swindle mortgage lenders out of more than $43 million.
After a six-day trial, Troy Chaika was found guilty of seven counts of wire fraud, three counts of mail fraud, and conspiracy to commit both of these frauds.
Evidence presented at the trial revealed that between 2005 and 2008, the defendant conspired to obtain money fraudulently through over 100 residential property transactions.
Working with co-conspirator Dustin LaFavre, who was prosecuted in December 2009, the defendant negotiated with builders of new properties as well as owners of existing properties to make “bulk purchases” of both single-residential units and property groupings at significantly reduced prices.
After purchasing the units, the defendants solicited real estate buyers by promising them that they would receive large “kickbacks” from lenders’ funds.
Potential buyers for these properties, who were unaware of the negotiated purchase price the defendants acquired the assets for, obtained the properties at an inflated price.
By charging these inflated prices, the defendants were able to pay the buyer the promised kickback and still have enough cash to split between all of the conspirators.
Lenders allegedly were unaware of the kickback amount given to the buyer and only saw the inflated sale price on a purchase agreement. In several instances, the defendant worked with buyers and mortgage loan officers to prepare false documents for use in the loan application process.
While the application process was pending, the defendant occasionally loaned buyers money for downpayments. Lenders agreed to fund mortgage loans for the purchase of these residential properties. After the loans were secured, property title companies handled closings based on the fraudulent information the defendants provided them.
For his crimes, Chaika faces a potential maximum penalty of 20 years in federal prison for each count. The defendant’s sentencing has not been scheduled.
