Three real estate professionals were charged Thursday in an alleged kickback conspiracy involving a condominium project by the bankrupt St. Paul developer Jerry Trooien.
The alleged conspiracy involved more than 40 units in the Cloud 9 Sky Flats, an office tower in Minnetonka that Trooien had converted into condos several years ago.
Federal prosecutors charged Sheri Lynn Delich, a defrocked Apple Valley real estate broker, My Dinh Lam, a Minneapolis appraiser, and Ashley Elizabeth Prasil, an inactive Eden Prairie real estate agent, in what is described as a $4.2 million mortgage fraud conspiracy involving the Cloud 9 condos. Delich also faces a charge of money laundering.
The charges were filed in a "felony information" rather than an indictment, which generally indicates that a plea agreement is expected. The accused parties could not be reached for comment.
Trooien, an audacious businessman with more than 100 business entities, filed for Chapter 11 bankruptcy in October. Most people know him for his ballyhooed, $1.5 billion riverfront development proposal, Bridges of St. Paul, which never gained traction in City Hall.
Trooien was not mentioned in the charging documents filed Thursday. But earlier this year, federal agents raided the headquarters of his company, JLT Group, searching for evidence of a fraud scheme. The affidavit they used to obtain the search warrant has remained under seal. Trooien, reached at his home Thursday, declined to comment on the charges.
According to the government, Delich, 45, Lam, 30, and Prasil, 26, knew that buyers of the Cloud 9 units were being paid about 30 percent of the purported purchase price outside of the formal closing. That money went into an account under Delich's control, and she skimmed some for herself and her coconspirators before returning the rest to the buyers, who had agreed to the process.
Prosecutors say lenders knew nothing about the arrangement and ended up funding artificially inflated loans. Records show that at least 32 units have gone into foreclosure.
The money-laundering charge relates to a $120,123 wire transfer that Delich allegedly accepted into her U.S. Bank account to share with other participants in one of the deals.
Last May, the Minnesota Department of Commerce revoked Delich's real estate broker's license, barred her from originating or servicing mortgages and fined her $100,000 for distributing kickbacks related to the Cloud 9 project. Garet Wright also lost his real estate license and was permanently barred from mortgage originating or servicing for taking part in the scheme as a seller's agent for Bridges Realty, one of Trooien's companies. Wright has not been charged criminally.
Prasil, formerly known as Ashley Riley, filed for chapter 7 bankruptcy in April 2008, signing as a surety for Cornerstone Development and Minnetonka Builders, both of which are now defunct. At the time, she described herself as a real estate agent with DLR Consulting and Finance in Savage; her license is now inactive. She listed assets of $7,870 and debts of $564,211.
Dan Browning • 612-673-4493