White Bear Lake Man Sentenced For Fraudulently Brokering Loans In Mortgage Fraud Scheme
MINNEAPOLIS—Today in federal court, a 38-year-old White Bear Lake man was sentenced for fraudulently brokering loans in a mortgage fraud scheme. United States District Judge David S. Doty sentenced Chad Wegscheider to 36 months in federal prison on one count of conspiracy to commit mortgage fraud through the use of the wires. Judge Doty will determine the amount of restitution that Wegscheider owes to victims at a future hearing, not yet scheduled. Wegscheider, who was charged via an Information on August 1, 2011, pleaded guilty on September 1, 2011.
According to the Information, Wegscheider, who was the owner and president of a Maplewood mortgage brokerage business called Minnesota One, conspired with others to devise a scheme to defraud mortgage lenders. From June 2006 through March 2008, Wegscheider’s co-conspirator recruited straw buyers to purchase newly-converted condominiums in Minnesota and Wisconsin at inflated prices with borrowed funds. In many cases, straw buyers bought numerous units in short periods of time.
To trick mortgage lenders into providing loans to investors, Wegscheider prepared loan applications that overstated the bank account balances of the straw buyers and falsely stated that the straw buyers would use their own money to make down payments on the properties, when, in fact, he knew his co-conspirator was providing the down payments. Wegscheider also opened accounts in the names of the straw buyers and deposited his co-conspirator’s money into them in an effort to make it appear to potential lenders that the straw buyers had sufficient cash on hand to make the property purchases. All the loans fraudulently brokered by Wegscheider went into default, causing more than $2.5 million in losses to the lenders.
This case was the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It was prosecuted by Assistant United States Attorney David J. MacLaughlin.