She was 22 and tired of exotic dancing for a living. So Irene Thomas bet her future on real estate, hoping that becoming a landlord would be her first step toward exiting the stage.

With the help of Universal Mortgage Inc., a brokerage company in Brooklyn Park, Thomas signed the papers to buy a house early last year. And she kept signing. And signing.

In 90 days, with none of her money down, Thomas had $2.4 million in debt and 10 houses in her name, most in north Minneapolis. Nine belonged to officials of Universal, the same company that handled the transactions for her.

Less than 18 months later, Thomas was losing every property to foreclosure after the monthly payments weren't made. Her credit ruined, she now says she was duped by a group of real estate insiders who sold houses at inflated prices.

The practice is so commonplace that real estate experts say it is helping fuel the nation's foreclosure epidemic, which is destabilizing neighborhoods as home after home is lost to banks and other lenders.

In places such as north Minneapolis, hit by 600 foreclosures already this year, investors have used real estate deals as get-rich-quick schemes, leaving empty homes, abandoned tenants and wrecked credit ratings in their wake.

Property records show Universal has been at the center of a web of transactions where a small group of investors, including several Universal employees, bought rental properties and quickly resold many at above-market prices. At least 27 houses linked to the firm have landed in foreclosure, according to property records.

Earlier this year, a mortgage lender filed a federal lawsuit against Universal, accusing two employees of using fraudulent documents to make money from another real estate deal. And two other people who bought houses through Universal are accusing the company of taking advantage of their real estate inexperience to sell them overpriced rental properties.

Nine mortgages processed by Universal and signed by Thomas incorrectly indicated that Thomas would live in the homes. In other cases, documents for two other Universal clients, both unemployed, stated they held jobs.

"All along I feel like they were just screwing me over and they knew what they were doing," Thomas said.

She said a state Department of Commerce investigator subpoenaed her early this year to talk about Universal and some of its employees. The department would not confirm the existence of any investigation.

Universal owner Donald Walthall declined to comment for this story. Marlon Pratt, who worked at Universal, said he owned five houses that Thomas bought and doesn't know what led to the foreclosures.

A lot of people get into the business of being landlords, Pratt said. "And they don't have no idea the work that comes behind it."

A growing part of the market

Real estate insiders have seen cases like Thomas' before -- so many that there's a name for it.

"This is called a straw buyer," said Kristin Wilson, a senior loan officer with Summit Mortgage Corp. in Bloomington.

Thomas' 10 mortgage applications wouldn't have been accepted by one lender, she said. "Which is why they would have submitted one to this investor, one to this investor, one to this investor ... because then everybody else is unaware of it. And if it was all done within a fairly short period of time, it would be easier to do," Wilson said.

The Commerce Department, which regulates the real estate industry, said straw buyer schemes are growing in scope and sophistication.