Accountant who had taught about fraud sentenced for his role in bogus mortgage deals.
An educator who has taught about fraud was fired Wednesday as an instructor with the Minnesota School of Business after being sentenced to prison for concocting a scheme through his previous job in the mortgage industry that cost banks millions of dollars.
Joseph W. Traxler, 64, an accountant, senior vice president and chief financial officer for the Centennial Mortgage and Funding Inc. mortgage company in Bloomington in 2007 and 2008, was sentenced Tuesday in federal court in Minneapolis. He was given five years in prison for his role in the roughly $8 million in losses the banks incurred through bogus deals.
Traxler, of Bloomington, who pleaded guilty in October, also was ordered to pay $5.4 million in restitution. He agreed not to appeal if he was given less than 5 1/4 years in prison. The government sought a term of 6 1/2 years.
In a presentencing court filing seeking to avoid prison, Traxler pointed out that he never personally gained from his crime and further argued: "I was trying to identify and solve a cash shortfall [at Centennial] and at the same time keep the company from failing. . . . In my efforts to buy time to solve the problem, I issued checks which inflated Centennial's balance."
Traxler joined the faculty at the Shakopee campus of the Minnesota School of Business in January 2009 as chair of its accounting program and taught the fraud course there three times. That year he was voted the school's top faculty member.
The campus’ leadership kept him on even after the charges were filed last September.
In January, after the guilty plea, Skakopee campus Faculty Dean Linda VanDuzee and Campus Director Bruce Christman wrote to the court: "It would be a significant blow to our students and staff if Mr. Traxler were to leave our school."
Traxler’s legal troubles, however, were not known to the leadership of the multi-campus Minnesota School of Business until it was reported Wednesday morning on startribune.com, said Blois Olson, a spokesman on behalf of the school
So, in spite of the Shakopee campus’ efforts on Traxler’s behalf with the court, the school’s central hierarchy ordered VanDuzee to fire their convicted instructor.
“When they found out, they had to fire him,” Olson said.
In response to the Shakopee campus’ leadership acting on behalf of Traxler without telling its superiors about his legal troubles, the school “is conducting a thorough internal review of procedures and protocols,” according to a statement issued by the school.
Traxler admitted misleading lenders about the status of existing mortgage loans to get them to advance Centennial more money; helping conceal defaults on existing mortgage loans; hiding the fact that about two dozen mortgage loans were double-funded; and kiting checks between Centennial's various bank accounts.
Traxler then used the money he obtained to make payroll and other operations expenses.
Paul Walsh • 612-673-4482