Home fraud suspect arrested in Florida

One of the state's larger -- and more mysterious -- mortgage fraud schemes appears headed for some closure.

A Minnesota mortgage broker who had cleared out his Minnetonka office in 2007 and disappeared was arrested in Florida Tuesday and indicted for running a straw-buyer scheme during the housing boom.

Michael Prieskorn, 35, originally of Ellendale, Minn., faces 23 counts of wire fraud, two counts of engaging in a monetary transaction, one count of mail fraud and one count of conspiracy to commit wire fraud, according to a federal indictment unsealed Tuesday. The indictment was filed under seal Jan. 20 in U.S. District Court in Minnesota. Prieskorn's associate Richard Laho, 54, of Buffalo, was charged in the same indictment with similar counts.

According to the U.S. Attorney's office in Tampa, the Internal Revenue Service arrested Prieskorn in Cape Coral Tuesday and he made his first court appearance in Fort Myers later in the day. He was released on a $75,000 secured bond and ordered to return to Minnesota within two weeks.

The U.S. Attorney's Office wouldn't discuss the case, and it's not clear why so much time passed before authorities arrested Prieskorn.

Prieskorn ran companies called Blackstone Sales and Main Estates, marketing a "risk free" investment in residential real estate. From December 2006 to April 2007, Prieskorn and Laho convinced "investors" to let them use their names and credit histories, paying them $5,000 to buy about 70 homes in Minnesota and Florida, according to the indictment. Prieskorn, Laho and others tricked mortgage lenders into making the mortgages by supplying the funds investors needed to close the deals.

The men told the investors that they'd manage the properties, handle all mortgage payments and resell them for a profit. Prieskorn took management fees ranging from $18,000 to $228,000 per property from the mortgage loan proceeds, totaling more than $5 million, according to the indictment. Most of the homes went into foreclosure, seriously damaging investors' credit records.

The indictment says Prieskorn and Laho persuaded people to buy 175 other properties from 2005 through 2006. Those purchases weren't included in the criminal scheme, according to the U.S. Attorney's Office.

When he returns to Minnesota, Prieskorn also faces a $2.2 million civil fine. The Minnesota Department of Commerce yanked his mortgage originator's license and fined him after he failed to show up for an administrative hearing in December 2008.

The Commerce Department charged Prieskorn in a civil proceeding with bilking investors in the purchase of about 220 homes, which would make his one of the largest mortgage fraud schemes ever operated in the state, by number of homes involved. Most of the homes were in newer housing developments in areas such as Eagan, Buffalo, Elk River, Maple Grove, Delano and Rochester.

Laho has an active real estate license. The Commerce Department wouldn't comment on whether it was investigating Laho.

The U.S. Attorney's Office wouldn't discuss the events leading to Prieskorn's latest arrest in Florida.