Firm linked to North Side foreclosures faces lawsuit

Three Minneapolis neighborhoods plan to sue the T J Waconia real-estate firm. It has ties to 150 foreclosures in a six-month span.

By STEVE BRANDT, Star Tribune

Last update: April 2, 2008 - 7:07 AM

Several Minneapolis neighborhoods, joined by the city, plan to announce a civil fraud lawsuit today against a real-estate firm implicated in North Side home foreclosures.

The lawsuit names T J Waconia, according to City Council President Barbara Johnson. The Roseville firm's principals have already been named by the FBI as the target of a criminal mortgage fraud investigation.

The lawsuit by the Folwell, McKinley and Webber-Camden neighborhoods is being financed by the nonprofit Family Housing Fund, which is a plaintiff along with the Greater Metropolitan Housing Corporation and residents. The City Council agreed to join the litigation.

Johnson said the lawsuit alleges that T J Waconia dealt fraudulently, causing widespread foreclosures in the three neighborhoods. It alleges that the vacant housing has hurt property values and increased crime.

Council members have said that the firm bought and resold properties in a concentrated area of the North Side, allowing its sales prices to be used as comparable sales for appraisals on additional transactions.

The city has already taken an unprecedented action to strip the rental licenses of 45 properties associated with transactions by the firm. It plans to revoke as many as 100 more.

The FBI raided T J Waconia last fall, alleging that the firm defrauded property investors and lenders that held mortgages on the properties. Named in the affidavit were owners Jonathan E. Helgason of Chisago City and Thomas J. Balko of Rogers, who have declined to comment since the allegations surfaced last summer.

According to property records, the firm purchased hundreds of properties from southern Anoka County to eastern Dakota County. The federal affidavit asserts that about 150 north Minneapolis properties that were foreclosed on in one six-month period passed through the firm's hands.

Steve Brandt • 612-673-4438

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