Fallout over real-estate misdeeds
- Article by: Jane Friedmann
- December 14, 2010 - 11:24 AM
Fraud and financial misdeeds were major themes of real estate license revocations in the first half of 2010.
The Minnesota Department of Commerce revoked the licenses of 12 real estate professionals and three companies from January through June. Eight of the revocations were accompanied by fines, and I drew information on their misconduct from department orders and opinions of the Office of Administrative Hearings.
All those listed below, with the exception of Colleen P. Cole, DMW Properties and William J. Bernier, consented to the department's order.
There are roughly 33,600 real estate-related licenses on file with the state.
Colleen P. Cole, formerly Colleen P. Wallin, New Hope, salesperson ($100,000 fine)
DMW Properties Inc., ($100,000 fine)
Through companies she co-owned, including DMW, Cole bought property in Brooklyn Park and secured a $19 million construction loan to build senior housing. Cole sold planned condos for as much as $540,000.
She and her companies failed to complete the construction, defaulted on the loan, neglected to properly document the buyers' purchases or reimburse them, according to the department.
Sheri L. Delich, Apple Valley, broker ($100,000 fine)
Delich funneled money acquired in a mortgage fraud to the participants in the scheme. The money came from kickbacks on mortgage loans secured for at least 40 condominiums at Cloud 9 Sky Flats in Minnetonka. Delich formed an unlicensed company and opened a bank account to accept the kickbacks, which were ostensibly for pre-paid property management services. She kept up to 2 percent of the money and distributed the rest according to a list provided by the seller's agent Garet C. Wright. Delich processed more than $2 million in kickbacks between January 2007 and mid-2008.
Richard M. Laho, Buffalo, salesperson ($65,000)
Laho participated in a scheme to defraud lenders and home buyers. It was billed as "virtually risk free." He and his partners sold 70 properties on behalf of builders. They paid buyers $5,000 and falsified mortgage applications. Each property sold generated between $18,000 and $228,000 in kickbacks. Nearly all the properties fell into foreclosure or default.
Ahmed Elbatrawy, Eden Prairie, salesperson ($35,000 fine)
Elbatrawy conspired with a mortgage originator to fraudulently buy 11 properties in 2006 and 2007. The two falsified loan documents to obtain down payments and mortgage loans. Sellers signed their excess closing proceeds over to the originator.
At least seven of the 11 properties have since been foreclosed upon.
William J. Bernier, South St. Paul, broker ($20,000 fine)
Bernier twice pleaded guilty to failing to provide a Truth-in-Sale of Housing report in a timely manner.
According to the department, Bernier failed to return earnest money on a canceled purchase. A seller claimed Bernier altered dates and added an incorrect sales price to documents.
Maxine Sandberg, Hibbing, salesperson ($10,000 fine)
Sandberg failed to fully disclose basement water problems in a house she was helping sell. After moving in, the buyers discovered Sandberg had received an estimate to fix the damage, but the repairs weren't made.
Garet C. Wright, Minneapolis, salesperson ($7,500 fine)
Wright participated in a "scheme or plan to aid or abet others in mortgage fraud" when he acted as seller's agent for the sale of condo units at Cloud 9 Sky Flats in Minnetonka. According to an affidavit by Delich, Wright helped Delich participate in the scheme.
Seven others also lost their licenses but incurred no fine. They are Jeff C. Byrd, Kathleen Cicmil, Eagle Realty, Katrina E. Gordon, Reena M. Jackson-Nevels, Kimberly A. Smith and We Say OK Realty.
Hard Data digs into public records and puts a spotlight on rule breakers in the Twin Cities and Minnesota. Contact me at email@example.com.
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