Five people have been charged in a $4.9 million mortgage fraud case involving at least 24 homes in Minneapolis and Golden Valley.

Hennepin County Attorney Michael Freeman announced on Monday the 25-count complaint of racketeering and theft by swindle against Universal Mortgage Inc. of Brooklyn Park.

Also facing those charges are Universal President Donald Walthall, loan officers Marlon Pratt, Rahmeen Underwood and Andre Bellfield, and Cleveland Fields, an alleged recruiter of straw buyers.

Walthall and Underwood have been arrested and released, but authorities are seeking the other three. Walthall's attorney, Bobby Champion, said he had pleaded not guilty. Underwood is due in court today.

"I think this is the beginning of mortgage fraud in north Minneapolis," said Folwell neighborhood staffer Roberta Englund of Universal operations. The neighborhood's staff has been aggressive in digging out suspicious real estate patterns and forwarding them to public officials for investigation.

Freeman said the scheme involved falsifying employment histories, incomes, net worths, and buyers' intentions to live in the homes. Homes were resold for far more than Universal's agents purchased them for, according to records.

All but one of the properties involved are located in Minneapolis; the other is in Golden Valley. All but one wound up in foreclosure, he said. The other was given back to the bank.

Freeman said that Universal came to the attention of his investigators last summer when the Star Tribune detailed the experiences of straw buyers who purchased homes through Universal. He said he doesn't plan to prosecute the straw buyers, calling them naive customers who were duped into buying properties for far more than they were worth.

The complaint details purchases by five straw buyers.

The Star Tribune featured Irene Thomas, an exotic dancer from St. Cloud, who said she hoped to parlay her purchases into rental income that would allow her to quit dancing. She was recruited by Fields, according to the complaint, who told her that he would find renters and manage the properties and eventually sell them so they'd each collect $200,000.

All nine properties were owned by Walthall or Pratt, who gained from $20,000 to $80,000 on the sales, the complaint said. Investigators said Thomas' loan applications were prepared by Universal and gave her a false job, misstated her financial situation and said that she intended to live in each home.

The prosecution of Universal is the sixth in a series of mortgage fraud cases filed this year by the Hennepin County attorney's office. "I'm amazed at how pervasive this is," Freeman said.

Freeman said that federal postal inspectors, the Minnesota Department of Commerce and the Minnesota Financial Crimes Task Force assisted in the investigation.

Steve Brandt • 612-673-4438