With his building under foreclosure, Donald Mordal decided to take some items that he says belonged to him.
Now, he's facing criminal prosecution, only the second person charged in Anoka County in the past 25 years under a 1963 state law. The law makes it a felony to remove or damage property subject to a mortgage with intent to hurt the property's value. It is so rarely used that officials in the Hennepin and Ramsey county attorney's offices couldn't recall prosecuting anybody under it.
Mordal, a businessman in Nowthen, was one of many Minnesotans caught in the foreclosure crisis. After years of building his business, he couldn't make his mortgage payments in June 2009, and the bank foreclosed on the 7,600-square-foot building he'd helped construct. With it sitting empty, the charges say, he removed some doors and windows, plumbing, cabinets and landscape boulders he had bought and installed.
According to police and his bank, he wasn't entitled to the property, and he caused more than $40,000 in damage.
"I don't think I did anything illegal," Mordal said. "The bank has the money and time to prosecute me, but not the money and time to help me get a loan."
Mordal, 44, was charged in March with "defeating security on realty." Prosecutors said he wasn't charged with a more common felony theft crime, which requires intent to take someone else's property and deprive them of it. Technically, he owned the property he is alleged to have taken illegally.
Mordal, who has nothing more than a speeding ticket on his record, was stunned when he learned of the charge. Potential jail time is now piled atop the foreclosures of his business and house, along with unemployment and a divorce.
Mordal didn't deny removing certain items he considered personal property. There were a cherry wood credenza, a few doors, a window between offices and a landscape boulder wall that was hindering drainage in the parking lot, he said.
The charges said he also removed a floor heating system, but he said that's impossible because it was under several inches of concrete.
None of the property was sold, he said, and a brand-new air conditioning unit sits behind the building, something he says he could have taken if gutting the property had been his intent. He also doubts the two damage appraisals supplied by the bank.
Authorities see things differently.
"Like any theft crime, he took property that didn't belong to him," said Bryan Lindberg, head of Anoka County's property crimes division. "With continued foreclosures, we hope we don't see a growing problem."
While stolen copper pipe from foreclosed property is a large headache, a spokesperson from TCF Financial said owners removing property hasn't been a problem. Other parts of the country, such as southern California, Arizona and Las Vegas, have had problems with people gutting their foreclosed property.
Ed Nelson, of the Minnesota Home Ownership Center, a statewide network of foreclosure prevention specialists, also said he hasn't seen similar cases here.
"We do warn homeowners of their responsibility of maintaining their property," he said. "The alleged amount of damage may have changed how the bank operated in this case."
Mordal had grand dreams in 2003 when he bought land across from City Hall and helped construct a building he leased to a buddy to start a small-engine repair business. When that business struggled, Mordal said they renovated the building, dividing it into more offices. He was a tenant himself, running a company dealing in energy-efficient products. Over the years, he made more than $100,000 in upgrades, he said.
In April 2008, Village Bank approved a $426,000 loan and Mordal agreed to give the bank a security interest in his company, DC Manufacturing.
As the economy declined in 2009, Mordal's business suffered and tenants dried up, including three mortgage companies, he said.
He said he talked to his bank about getting a short-term federal-stimulus loan from the U.S. Small Business Administration to reinvest in his business. He said the bank's loan committee told him it would be too labor-intensive to pursue and that the bank would make below-market returns. He also said the bank was unwilling to work with him on approving a buyer for the building.
According to the charges against Mordal, the bank contacted law enforcement in May 2010 when it learned he had removed items and allegedly damaged property just before the sheriff's foreclosure sale. He says he had removed the items months earlier.
Aleesha Kveton-Webb, vice president of special assets for Village Bank in Blaine, said the bank's four branches in Anoka County work hard to improve local communities and that they have to protect customer's assets. The bank could have "just left this at foreclosure" and not pursued criminal charges, but "we want to make a point that this shouldn't happen to other banks."
"I get there are big, bad stories about banks out there," she said. "We lend money to good people and we are very careful about who we lend it to. We had a relationship with this borrower. This kind of hurt."
Meanwhile, for Mordal, a building that once gave him so much pride has now become a constant embarrassment.
"Why would I do damage to the property? That would be counterproductive," he said. "I'm absolutely astounded this has gotten this far."
David Chanen • 612-673-4465