In August 2004, a source in the Bemidji real estate industry complained to the FBI about a real estate agent who appeared to be engaging in fraudulent deals involving rental properties.

But federal agent John Egelhof said he was too busy to pursue it at the time. So were the Minnesota departments of Revenue and Commerce.

Duane Ebbighausen, the Beltrami county assessor, said he notified those agencies in 2004 of a pattern of suspected frauds so extensive that they actually raised the assessed values of properties in Beltrami County.

The deals involved real estate agent Edward Detwiler and his associates.

Even so, no investigation took place for more than three years -- until Mary Bettelyoun of Frazee called Egelhof in December.

Bettelyoun charged that Detwiler had tricked her disabled father, Alvin Bettlelyoun, and her mother, Vonnie Rose, into buying a decrepit home.

On March 26, FBI agents raided Detwiler's former sales office, Realty Executives -- the Producer Group, seeking records on nearly 150 property transactions.

Agents also searched Trust Mortgage and Action Appraisal, two separate entities with offices at the same address.

It was one of Egelhof's last acts as an FBI agent; he retired the next day.

Word of the raid spread quickly.

The Beltrami County recorder said that Realty Executives handles about a third of the county's real estate transactions each year, according to a sworn statement.

Detwiler, contacted Friday in Florida where he is fishing with his children, said he knew nothing about the raid or the allegations against him. But his lawyer, Marsh Halberg, called later and contradicted him.

"Obviously, we recognize that a search warrant was done," Halberg said. "It's my understanding that Eddie is the focus of this thing, and there are a lot of collateral people that they're talking to, and there are a lot of transactions that they're looking at," he said.

"To this point, we've been cooperative," Halberg said, adding that Detwiler denies any wrongdoing.

Egelhof's affidavit is 33 pages, not counting a nine-page attachment listing 145 properties.

"The properties appear to have been sold repeatedly among a group of friends and associates of Ed Detwiler," he wrote.

Some properties were sold to ill-suited, unsophisticated buyers who later defaulted on the loans, sending the properties into foreclosure.

$131,000 for an unfit home

The Bettelyouns said they were told the house they were buying for $131,000 had a new roof and septic tank, but it had neither, Egelhof said. The roof leaked and eventually collapsed some ceilings. Mold covered some walls. County officials told the Bettelyouns the house was unfit for human habitation.

Egelhof said the Bettelyouns' income had been inflated to qualify them for a mortgage, which carried a large balloon payment from the seller. He said the broader investigation indicated a conspiracy to inflate property values through sham sales, price hikes used to cover downpayments by unqualified buyers, kickbacks after closings, undisclosed second mortgages, and falsified closing documents and mortgage loan applications.

According to Egelhof's affidavit, the deals went beyond Detwiler and his company to include companies operated by Matt and Michael Sparby, Darwin Wiebolt, Jeffrey Scripture, Michael Todavich and former Seattle Mariners pitcher David Allen Burba, among others.

Egelhof describes some rapid trades involving at least a dozen lots next to the Longbow Golf Course in Cass County that Wiebolt Properties Inc. bought and sold.

Wiebolt said Friday that he's done nothing wrong. "The guy they're after is Edward Detwiler. Us other guys ... we've purchased some properties through Eddie is how our names got out there. But I'm not involved in that deal at all," he said. Wiebolt said the FBI has never spoken to him.

The Sparbys did not respond to messages seeking comment Friday. But the Bemidji Pioneer reported after the search that Matt Sparby said he and his employees cooperated during the raid and were not involved in the investigation.

Scripture, who was involved in a deal that appears to have included a $25,693 kickback, according to the affidavit, denied any wrongdoing. "It wasn't a kickback," he said. "What it was, was for repairs on the properties."

Scripture, an insurance agent, said he bought several properties "at the top of the market level -- but I've got them all. They've got large mortgages on them," he said. "I thought I was buying properties to help myself in the future."

Todavich expressed surprise that his name was in the affidavit. He said he bought some houses, fixed them up and sold them.

"Everything I touched, I fixed," he said. "I kind of figured Mr. Detwiler out early on and needed no part of that program."

Dan Browning • 612-673-4493