FBI names 2 in latest mortgage fraud case

TJ Waconia of Roseville and its owners have been named in what could be the largest such case in the Twin Cities area.

By Steve Brandt, Star Tribune

Last update: November 27, 2007 - 10:10 PM

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For the first time, the FBI has identified the owners of TJ Waconia as the targets of a mortgage fraud investigation that would represent the biggest such case uncovered so far in the Twin Cities area.

A federal search warrant affidavit made public on Tuesday names the real estate business based in Roseville and its owners. The business and others related to it were raided earlier this month by federal agents seeking records.

The TJ Waconia investigation is the latest of several mortgage fraud cases in the Twin Cities to be investigated or charged by federal or Hennepin County authorities. While most of the cases are in north Minneapolis, affected properties range from New Prague to Champlin.

Named in the affidavit were Jonathan E. Helgason, 44, of Chisago City, and Thomas J. Balko, 37, of Rogers.

The affidavit by FBI agent Jennifer Khan alleges that they and the company they co-owned defrauded property investors and lenders that held mortgages on their properties.

Helgason and Balko did not return Star Tribune phone calls.

According to property records, the company has purchased hundreds of properties from southern Anoka County to eastern Dakota County. The affidavit indicates that about 150 north Minneapolis properties foreclosed on in one six-month period earlier this year passed through TJ Waconia's hands.

That's one in every five foreclosed properties in that area in that period, bringing more stress to neighborhoods through boarded-up homes on blocks and uprooted families who place increased demand on city services.

Local officials who brought the real estate firm to the attention of federal investigators this summer were pleased by news that the investigation has found probable cause of criminal activity.

"I'm delighted," said Minneapolis City Council President Barbara Johnson. "I'm glad that they're pursuing these people because they have done tremendous economic damage."

The FBI affidavit is based in part on three unidentified people who bought homes through TJ Waconia. It indicates that the firm bought numerous homes out of foreclosures and resold them to investors at significant markups. Some investors thought they were purchasing the properties outright, while others thought that they were lending the firm their credit, the affidavit said.

But it said the firm did these deals in a way that creates probable cause that Balko and Helgason submitted fraudulent documents to lenders. That conduct also likely amounts to mail, bank and wire fraud, the affidavit said.

"These guys have hurt a lot of people," said Patrick Burns, a private attorney who has sued Balko and Helgason. "They targeted certain types of people, they told similar lies and they got them involved in schemes that were fraudulent. They were designed to fail. It's a classic Ponzi scheme."

In Minneapolis, one complication of the TJ Waconia transactions is that many of the properties are occupied by renters, but their owners haven't obtained the rental licenses required by the city.

The city recently posted 57 such occupied properties that have passed through TJ Waconia's hands with illegal occupancy notices because they lack rental licenses. Although the city initially gave tenants a move-out date if the landlord didn't obtain a license, it since has retracted that. Instead, it is focusing on finding the owner and issuing that person a summons.

There are spillover efforts on neighbors, said Janine Atchison, a city housing inspection manager. "Nobody's taking care of these properties. No one's mowing the grass. No one's picking up the trash," she said.

"Somebody made lots of money on this and where did it all go?"

Staff writer Dan Browning contributed to this report. Steve Brandt • 612-673-4438

Steve Brandt • sbrandt@startribune.com

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