Alleged Stillwater fraudster is back at work

Federal agents say longtime Hastings resident Jim Hoffman has been stealing money from investors in an Iowa real estate project even while he awaits trial on mortgage fraud charges.

A search warrant made public Wednesday in Minneapolis says Hoffman, 52, solicited nearly $400,000 from investors to convert a building in Muscatine, Iowa, into an assisted-living residence for the elderly. But he spent nearly all of the money on personal expenses, including $6,500 a month for a luxury home in Stillwater, where he's been living since September, FBI Special Agent Jared Kary wrote in a sworn statement.

"There's nothing there that's a crime," Peter Wold, one of Hoffman's attorneys, said in response to the warrant. "It's a good investment that's legitimate," he added.

Hoffman and his wife, Teresa Gay Hoffman, were indicted Oct. 17 on charges of conspiracy to commit mortgage fraud and wire fraud. Prosecutors notified Wold last month that they expect to file additional charges, and possibly charge another defendant in the case.

"It appears that Hoffman has done nothing but fraud schemes related to real estate or bank fraud since 1995," Kary wrote in his affidavit.

"There's two sides to that story," Wold said. "Obviously, people have been affected by the downturn in the real estate market and that wasn't lost on Jim Hoffman; he got burned by it."

But Wold said Hoffman's deals were all "real places, real houses, real condos, real real estate. It's not made up of fake invoices or fake properties or anything like that."

The FBI statement said that Hoffman has been promoting the Muscatine project since December 2010 through a Miami-based company called Corner Block Capital. The registered agent for that firm is listed as Hoffman's 24-year-old son, Benjamin, who could not be reached immediately for comment.

A person Kary identified only as "Individual A" helped raise $378,000 from five investors for the Muscatine project. He said Jim and Benjamin Hoffman told their fundraiser to transfer the money into an account held by Corner Block Capital at Wells Fargo. The money was moved in three installments between Aug. 19 and Sept. 21.

Although the money was supposed to go to the assisted-living project, Kary said, Hoffman tapped the money for at least $200,000 in personal expenses between Aug. 22 and Nov. 2. He also used $50,000 of the funds to pay a legal retainer for him and his wife, Kary said.

Hoffman continued to solicit investors for the project as recently as last week, Kary wrote. As of Jan. 9, Corner Block had failed to buy the building and lacks the money to do so, a fact that Hoffman has concealed from the investors "on whose funds he has been living since August," Kary said.

The search warrant also said that in May, Hoffman solicited $105,000 from three people for an investment in another Miami firm called Infinity 8020. Florida business records list Benjamin Hoffman as its manager.

Kary said that Jim Hoffman hasn't had any legitimate source of income since 2001 and has been under investigation by law enforcement since at least 2003.