Two charged in $2 million scam

Two Minnesota executives of a real estate closing firm have been charged with stealing more than $2 million in home mortgage loans by routing $370 million in loans to the wrong bank account.

A federal grand jury indictment handed down Thursday charged Molly L. Heise, 49, of Chaska, the owner of real estate closing firm Profile Title & Escrow Corp. of Bloomington and New Hope, and Christine A. Hein, 38, of Buffalo, the company's chief financial officer, with multiple counts of criminal wrongdoing, including wire fraud and money laundering.

It was the latest in a small flood of real estate scams in Minnesota. In the past two months, 11 people have been charged with types of mortgage fraud and five have pleaded guilty, said the U.S. attorney's office in Minneapolis, which prosecuted the cases.

Between June 2002 and January 2004, the two women are alleged to have deposited $370 million in loan proceeds to a secret bank account in violation of their agreement with Chicago Title, which was the sole insurer and underwriter of Profile Title & Escrow. To close real estate transactions, Profile Title & Escrow accepted wire transfers and check deposits from buyers and lenders.

Heise allegedly then transferred more than $2 million from the secret bank account to a personal account. In addition, Heise was alleged to have deposited clients' loan money directly to the private account and used the money to pay personal expenses.

When Chicago Title withdrew from its business relationship with Profile, the two women allegedly issued fake Chicago Title closing protection letters to the lenders providing mortgage loans to their real estate clients.

The indictment alleges that Heise and Hein failed to use loan money to pay off their clients' previous mortgage loans, as they had promised, and failed to file hundreds of mortgages with county recorders because they had embezzled the money intended to pay state deed tax, registration tax and recording fees.

Hein allegedly wrote "lulling letters" to the firm's real estate clients promising to pay off property liens, even though Profile lacked money, the indictments allege. The two women also sent checks to real estate sellers and lenders, even though they had insufficient funds to cover the checks.

Heise was charged with five counts of wire fraud, two counts of engaging in monetary transactions with property derived from unlawful activity, one count of promoting money laundering and two counts of failing to file federal income tax returns.

Hein was charged with five counts of wire fraud, one of engaging in monetary transactions with property derived from unlawful activity and one count of promoting money laundering.

The indictment against Heise replaces one handed down in June that charged her with six counts of engaging in monetary transactions with property derived from unlawful activity, said Jeanne Cooney, a spokeswoman for the U.S. attorney's office in Minneapolis.

The two women each face up to 20 years in prison on every count of wire fraud, up to 10 years each for unlawful property transactions charges and up to 20 years for money laundering. Heise also faces up to one year in prison for each failure to file taxes.

More fraud charges

Other pending mortgage fraud cases in Minnesota include:

Ronald Clark Joseph, 49, a licensed mortgage broker, was charged with two counts of mail fraud, one count of wire fraud, and one count of money laundering in connection to a scheme to defraud mortgage lenders out of millions of dollars.

Between 2004 and 2006, when Joseph worked for LHS Inc., he allegedly arranged for potential lenders to be sent fraudulent loan applications that misrepresented details of a real estate transaction, such as overstating the purchase price.

Joseph later distributed about $2.5 million of the loan money to others and himself.

In another scheme, Jill M. Lehn, 39, of Prior Lake pleaded guilty to one count of wire fraud and one count of money laundering, and Isadore Stewart pleaded guilty to one count of wire fraud.

Between 2004 and 2006, Lehn, a mortgage loan closing agent, prepared fraudulent closing documents in more than 60 real estate transactions that overstated the purchase price of the properties. Part of the loans were then paid to the buyers.

Stewart illegally obtained approximately $271,333 between April and July of 2006 in real estate transactions involving two properties in Minneapolis and one in Orono.

Steve Alexander • 612-673-4553

Steve Alexander • alex@startribune.com