Described as the ringleader in the Cloud 9 Sky Flats mortgage fraud case, an Eagan man was sentenced Wednesday to a year and a day in prison for his role in the scheme.
Joseph Steven Meyer, 48, was the former vice president of St. Paul developer Jerry Trooien’s real estate firm, JLT Group. Last year, he pleaded guilty to a charge of mail fraud in a plea agreement with the government, and he’s the only person of nine charged in the Cloud 9 case to receive jail time.
In U.S. District Court in St. Paul on Wednesday, Meyer’s attorney, Robert Sicoli, argued against jail time, claiming Meyer did not financially benefit from the fraud and that no lenders were hurt, either.
But in doling out the sentence, Judge Susan Richard Nelson said, “You were the leader, the organizer, of this scheme.”
Federal prosecutors claim that Meyer and eight others defrauded mortgage lenders of more than $14 million at Cloud 9, a former office building in Minnetonka that Trooien’s firm redeveloped into condos at the height of the housing boom. Trooien has not been charged in the case.
According to court documents, the final five condos in the complex were slow to sell in the fall of 2007. A buyer emerged, but did not want to pay the full $1.4 million asking price, so a decision was made by Meyer and others to sell them for what appeared to be list price, but with a discount hidden in the form of bogus leases and related charges.
In order for the scheme to work, Assistant U.S. Attorney Robert Lewis said Meyer had to lie and direct his subordinates to doctor paperwork related to the condo sales. Lewis argued in court briefs that Meyer, who was responsible for $466,995 in kickbacks, should be sentenced to 41 months in prison.
But Sicoli, as well as Meyer’s family and friends in letters to the judge, described him as an understated and caring person whose professional life took an aberrant turn. In addressing the judge Wednesday, a choked-up Meyer apologized to the dozens of family members and friends who packed the St. Paul courtroom. Vowing to make changes in his life, he said, “this will never happen again.”
Judge Nelson said Meyer’s crime is “inconsistent with your behavior of all your life.”
Meyer was also ordered to forfeit $100,000 and serve 150 hours of community service once released from prison.
On Wednesday afternoon, Chanprasith Phouthavongsay, 38, of Burnsville, received three years’ probation, 150 hours of community service and was ordered by Nelson to pay $165,000 in restitution.
Briefs filed by the government describe Phouthavongsay as a minor participant in the scheme.