Bloomington Man Sentenced In Sexton Lofts Mortgage Fraud Scheme
MINNEAPOLIS – Earlier today in federal court, a 66-year-old Bloomington man was
sentenced in connection with his participation in a $2.5-million mortgage fraud scheme that
involved the sale of condominiums in the Sexton Lofts building in downtown Minneapolis.
United States District Court Judge Patrick J. Schiltz sentenced Gerald James Greenfield to 50
months in prison on one count of conspiracy to commit money laundering and fined Greenfield
$10,000. In addition, Judge Schiltz ordered Greenfield to forfeit to the United States assets
valued at hundreds of thousands of dollars which were involved in the money laundering
conspiracy. Greenfield was indicted, along with Nicholas Ryan Delon Smith, on February 10,
2010, and pleaded guilty on May 3, 2010.
On January 25, 2011, Smith, age 32, of Prior Lake, was sentenced to 40 months on one count
of conspiracy to commit mortgage fraud through the use of wires and one count of money
laundering. He also pleaded guilty on May 3, 2010.
In his plea agreement, Greenfield admitted that beginning in September of 2006, he
conspired with an individual by the name of Brett A. Thielen, and others, to launder proceeds of
the mortgage fraud scheme Thielen was executing at Sexton Lofts. Pursuant to the scheme,
Thielen sold condos during a market downturn by recruiting financially unqualified buyers and
fraudulently inducing mortgage lenders to lend those buyers money. To further the scheme, the
condo prices were artificially inflated, creating substantial profits that Thielen needed to hide.
Greenfield admitted helping hide those profits, even while knowing they were derived from
Specifically, Greenfield wired the illegal profits to an unindicted Australian attorney through whom he had previously laundered money. Then, at Thielen’s direction, Greenfield instructed
that attorney to wire portions of those profits to other places to make it appear as if they came
from legitimate sources. For example, Greenfield directed the Australian attorney to wire a
substantial amount of the illegal funds to a brokerage firm for the purpose of purchasing stock in
a company called Digital Town, Inc.
During the investigation into Greenfield’s possible wrongdoing, an undercover law
enforcement officer met with him at Manny’s restaurant in Minneapolis on June 30, 2009. In his
plea agreement, Greenfield admitted that while at the restaurant, he also agreed to assist the
officer in laundering $50,000 in supposed drug trafficking profits by converting the funds to
Digital Town stock.
As for Smith, he admitted participating in the mortgage fraud scheme from August of 2006
through April of 2007. During that time, he was the sole owner of Heloc, Inc., a mortgage
brokerage company in Minneapolis. In that capacity, he falsified income and employment
information about his straw buyers in an effort to convince lenders they were credit-worthy loan
applicants. Smith also knew the prices of the condos were greatly inflated, and that those prices
were supported by fraudulent appraisals.
For his participation in the scheme, Smith received kickbacks from loan proceeds following
the sale of condo units. On December 5, 2006, Smith wire transferred $25,500 in illegal proceeds
from his company’s bank account to a third party during a transaction to purchase an automobile.
On December 21, 2010, Thielen, age 43, of Savage, was sentenced to 27 months on one
count of conspiracy to commit mortgage fraud through the use of wires and one count of money
This case is the result of an investigation by the Internal Revenue Service-Criminal
Investigation Division. It is being prosecuted by Assistant U.S. Attorney David J. MacLaughlin.
This law enforcement action is in part sponsored by the interagency Financial Fraud
Enforcement Task Force. The task force was established to wage an aggressive, coordinated and
proactive effort to investigate and prosecute financial crimes. It includes representatives from a
broad range of federal agencies, regulatory authorities, inspectors general, and state and local
law enforcement who, working together, bring to bear a powerful array of criminal and civil
enforcement resources. The task force is working to improve efforts across the federal executive
branch and, with state and local partners, investigate and prosecute significant financial crimes,
ensure just and effective punishment for those who perpetrate financial crimes, combat
discrimination in the lending and financial markets, and recover proceeds for victims of financial