A 28-year-old Webster man was sentenced Wednesday in federal court in St. Paul for bilking more than $7 million from at least 15 real estate mortgage lending companies.
Judge Richard Kyle sentenced Dustin LaFavre to 48 months in prison on one count of conspiracy to commit mail and wire fraud.
LaFavre was charged in November 2009, and pled guilty the next month.
In his plea agreement, LaFavre admitted he conspired with an unnamed real estate broker to defraud the mortgage lenders. The scheme ran from 2005 to 2008 and involved at least 172 properties.
Specifically, LaFavre and the broker recruited real estate buyers by telling them they would receive significant cash from the proceeds of the mortgage loans. LaFavre and the broker negotiated the value of single properties and property groupings to inflate their sale prices. Those inflated prices were reported to and approved by lenders. After the sales transactions closed, LaFavre and the broker divided the difference between the inflated sale prices and the true sales prices among themselves and the buyers.
LaFavre also helped the buyers qualify for their mortgage loans by creating false verifications of employment and depositing money into their bank accounts to make their balances larger. He also worked with mortgage brokers and loan officers who were willing to prepare false documentation to submit to lenders.
Susan Feyder • 612-673-1723