Minnesota Real Estate Company, Realtor, and Accountant Indicted for Mail and Wire Fraud Scheme Affecting U.S. Financial Institutions
First Indictment in Ongoing Investigation
A federal grand jury returned an indictment against a real estate company, a realtor, and his accountant for participating in a long-running conspiracy to defraud companies, including financial institutions, in connection with foreclosed properties in the Minneapolis area and elsewhere, the Department of Justice announced.
The indictment, filed on August 15, was unsealed today in the U.S. District Court for the District of Minnesota in Minneapolis. Detloff Marketing and Asset Management Inc., Jeffery J. Detloff, and Lori K. Detloff are charged with conspiring to commit mail fraud and wire fraud affecting financial institutions, from in or about September 2007 and continuing through in or about June 2015. Jeffery Detloff, a realtor who sold and managed foreclosed Minneapolis properties on behalf of victim companies worked alongside his wife, Lori Detloff, an accountant for Jeffery Detloff and associated companies, in committing the fraud. The Detloffs conducted their real estate business through Detloff Marketing. In addition to the conspiracy charge, the indictment includes four counts of wire fraud and four counts of mail fraud.
According to the indictment, the Detloffs devised a scheme requiring repair contractors to pay the Detloffs kickbacks. In return, Jeffery Detloff used his position as a realtor for the victim companies to steer housing repair contracts to contractors who paid the kickbacks. The contractors paid kickbacks to the Detloffs through Detloff Marketing. The indictment further alleges that Jeffery Detloff procured and submitted sham bids as part of the scheme to defraud the victim companies. One housing repair contractor has already pleaded guilty in connection with this investigation.
“This indictment affirms the Antitrust Division’s commitment to protecting the American housing market from fraud,” said Assistant Attorney Makan Delrahim of the Department of Justice’s Antitrust Division. “We will continue to work with our law enforcement partners to protect the integrity of the competitive process.”
“As alleged, the defendants created a scheme to siphon as much money as they could from these properties, no matter the method, no matter the victim," said FBI Special Agent in Charge Jill Sanborn of the Minneapolis Division. “These scams victimize all of us, and the FBI and our law enforcement partners will continue to unravel these schemes and hold accountable anyone found responsible for defrauding the system.”
This is the second case involving fraud and kickbacks relating to repair contracts for properties in the Minneapolis area owned by financial institutions. The maximum penalty for wire fraud affecting a financial institution, mail fraud affecting a financial institution, and conspiracy to commit mail and wire fraud affecting a financial institution is 30 years of imprisonment and a fine of $1,000,000. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The charges announced today are the result of a federal investigation of housing repair contracts in the Minneapolis area. The investigation is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Minneapolis Division.