A minor player in the Cloud 9 scheme admitted he made “a big mistake.”
Described as a minor player in the Cloud 9 Sky Flats mortgage fraud case, an Eden Prairie man on Tuesday was sentenced to three years’ probation for his role in the multimillion-dollar scheme.
John Halvor Ketcham, 52, who pleaded guilty last year to a single charge of conspiracy to commit wire fraud, was also ordered by U.S. District Judge Susan Richard Nelson to pay into a restitution fund and must perform community service.
Cloud 9 Sky Flats was developed into condominiums by St. Paul-based businessman Jerry Trooien — who has not been charged in the fraud case, which occurred during the housing boom of 2006 and 2007. However, nine other people have been charged.
Ketcham allegedly found buyers for units in the Minnetonka development, and then submitted false information to lenders financing the sale. A kickback from the loan proceeds of up to 30 percent of the purported purchase price was paid to those involved in the scheme outside the formal closing. The total purchase price of the condo units involved was artificially inflated to include the amount of the kickback, court documents state.
Standing in a blue blazer with his hands folded before Nelson on Tuesday, Ketcham acknowledged he made “a big mistake” and learned his lesson.
“You won’t see me in here again,” he said.
The U.S. Department of Justice said more than 40 Cloud 9 units were sold through the scheme, and more than 80 percent of the loans have since defaulted. Court documents state that the scheme fraudulently netted more than $14 million from lenders, and that those involved in the kickbacks skimmed over $4 million.
Ketcham’s lawyer, Dennis Johnson, said in court Tuesday that his client had never been involved in any criminal activity before the Cloud 9 case. Ketcham immediately accepted full responsibility for his actions, even though he said he wasn’t aware at the time that he was breaking the law, he said.
While Ketcham agreed to cooperate with the government in its case against others who were more deeply involved, ultimately his aid was not needed, according to court documents.
Johnson said Ketcham “has lost everything” and is finding it difficult to find a job, but he is committed to rebuilding his life.
Janet Moore • 612-673-7752