YEAGER101207

Montgomery, Minn., appraiser admits hyping values

Donald Todd Yeager testified that he inflated value of homes by $50,000 to $100,000 each.

By Dan Browning, Star Tribune

Last update: October 11, 2007 - 9:48 PM

A real estate appraiser from Montgomery, Minn., admitted Thursday to inflating values on 74 homes in the southern Twin Cities suburbs in an alleged mortgage fraud scheme that authorities say bilked lenders out of $50 million.

Appraisers are seldom charged in such cases because their work represents an opinion of value; it's hard to prove that an opinion is fraudulent.

But Donald Todd Yeager testified that he inflated his appraisals by $50,000 to $100,000 each. Yeager said that he was paid only his standard $400 fee for each appraisal but that he went along with the alleged scheme to keep the business.

The client was identified in court only as Company A, but Yeager's attorney, Lee Johnson, confirmed that it is Parish Marketing and Development. Investigators suspect that Parish Marketing used straw buyers to buy multiple homes at inflated prices in New Prague, New Market and other southern suburbs. The scheme unraveled as the housing market slowed, new buyers could not be found and houses ended up in foreclosure.

Yeager pleaded guilty Thursday to depriving lenders of his "honest services" as a certified appraiser, a felony. Assistant U.S. Attorney Joe Dixon said that the losses attributable to Yeager are between $2.5 million and $7 million and that there are between 10 and 50 victims.

Johnson said Yeager understands that he "fell on the wrong side of the line." But they plan to argue that the losses should be based on the $30,000 in fees that Yeager received and that the number of victims should not apply.

Under Dixon's argument, the federal sentencing guidelines call for a prison term of 63 to 78 months. Under Johnson's, the guidelines call for 15 to 21 months. The fine would range from $4,000 to $125,000. U.S. District Judge Ann Montgomery will impose sentence later, after hearing arguments.

According to Yeager's plea agreement, his appraisals "were based primarily on a 'value' provided by a mortgage broker and were not the product of independent professional analysis." Yeager also relied improperly on information provided to him by a person working for the homebuilder.

Public records show that Parish Marketing is headed by Michael and Ardith Parish and that the business is registered at their home in Eagan. Neither has been charged. Attorneys working with the Parishes have said they are trying to work out "a global resolution" that would resolve any outstanding foreclosures.

Yeager is cooperating in the investigation. He is the fourth defendant to plead guilty, joining a bank loan officer, a real estate closing agent and a straw buyer.

Dan Browning • 612-673-4493

Dan Browning • dbrowning@startribune.com