Chances are slim Melony Micheals and John Foster will see a dime of the $850,000 they’re owed by the mortgage fraudsters who stole their identities and destroyed their lives.

The Plymouth couple know the judge’s order for damages won’t restore their ruined credit, cease the hounding from debt collectors or give them back the 6½ years that Micheals can only describe as a living nightmare that sent the couple spiraling into depression and near-destitution.

Still, she said, the judgment against Realtor-turned-convict Larry Maxwell and his associates is vindication for the husband and wife whose solid financial history made them targets.

It also may be the first award of its kind in the state for victims of identity theft related to the mortgage fraud rings that sprouted parallel to the real estate boom of the mid-2000s. The FBI identified the Twin Cities in 2008 as a hotbed of mortgage fraud, triggering dozens of multimillion-dollar investigations.

Maxwell’s is believed to be the third-largest mortgage fraud ring prosecuted by the Hennepin County attorney’s office.

“I’m not happy, and there’s a likelihood we’ll never see the money,” said Micheals, 51. “But it’s still a moral victory. It’s something on record, so hopefully we can help other people down the road. Hopefully no one will ever have to suffer as much as we did.”

The couple’s attorney, Shari Lowden, said it could be the first instance of case law on civil actions regarding identity theft in the mortgage fraud realm, and could prove a valuable resource in future lawsuits on behalf of victims like Foster and Micheals.

“It clearly recognizes in a judicial way all the pain and suffering that my clients have gone through.” Lowden said.

‘Immense’ stress

Foster, a UPS delivery driver, and Micheals, a business broker, made a comfortable living and were preparing to refinance their home in 2006 to pay for home renovations when Maxwell, who ran Realty Executive Advantage Plus Group from his home, conspired with Jerome KingRussell to steal Foster’s identity. KingRussell impersonated Foster, while Maxwell acted as a Realtor for both sides of real estate transactions in Foster’s name totaling more than $500,000 on two overappraised homes in north Minneapolis and Bloomington. Maxwell let the homes slip into foreclosure while he made real estate commissions from his deals and profited from fees and kickbacks arising from his role as a mortgage loan officer, also disbursing funds to others who were in on the scheme.

Micheals and Foster had no idea what was happening. First came a notice that a mortgage payment was overdue on a home they knew nothing about. As they scrambled to get to the bottom of what was happening, their interest rates and monthly payments shot up while their credit limits plummeted. When creditors wouldn’t accept their explanation for what happened, they stopped answering their phone, so creditors called their neighbors instead. Foster had to cash in his stock and retirement funds just to keep the utilities on — and more than once they were still turned off. Meanwhile, with help from a Realtor friend, Micheals used records to piece together details of the two houses purchased with Foster’s identity. When they discovered the players behind the scheme, they pressured authorities to prosecute.

“The stress was immense.” Micheals said. “We spent two years going after these guys, and there were days that just getting out of bed was a chore.”

In 2009, a Hennepin County jury convicted Maxwell of 18 counts of mortgage fraud involving Foster and Micheals and other cases, while KingRussell pleaded guilty to related charges. Maxwell was sentenced to 16 years in prison for racketeering while KingRussell is serving a six-year prison sentence for identity theft.

Foster and Micheals sued Maxwell; KingRussell; Maxwell’s wife, Vicki Cox-Maxwell; the mortgage broker, First USA Title, and notary Janie Coates for damages, alleging fraud and negligence on behalf of the agents who allowed the scam to proceed by failing to properly verify Foster’s identity. On March 1, Judge Mel Dickstein ordered that the four be held responsible for $849,131, including thousands in tax liability for cashing retirement funds early, more than $80,000 in increased interest and penalties levied by their credit card companies, nearly $200,000 in increased mortgage interest and $125 a day for pain and suffering.

“The consequences of the fraud to Micheals and Foster were devastating,” both personally and financially, Dickstein wrote in his order. He also didn’t spare First USA Title and Coates for their negligence.

“Maxwell and KingRussell could not have been successful if a number of people had performed their jobs in a business-like manner,” Dickstein wrote.

In a statement Wednesday, First USA Title’s attorney said the company respectfully disagreed with the court’s findings, but “shares the Plaintiffs’ condemnation of the crimes committed by Larry Maxwell and his cronies.”

No blood from a turnip

Lowden said it’s hard to say whether her clients will receive any sort of payout. Besides being incarcerated, Maxwell is already ordered to pay hundreds of thousands of dollars in restitution and fines related to his criminal case. The remaining defendants, who could not be reached for comment, are believed to have few assets, Micheals said. There’s the possibility of a payout through an insurance policy from First USA Title, although the company dissolved in 2009. However, Lowden said, “It does not make them less liable.” Still, she said, “Getting blood from a turnip is a difficult thing to do.”

Micheals and Foster understand that. And although it won’t put their lives back together, the 13-page document that acknowledges they were wronged holds a different kind of value.

“It means people like us will have something to fight the battle with — not come in with nothing, like we did,” Micheals said.