New Condo Development In Foreclosure Now Subject Of Minneapolis Feds' Property Flipping Probe

In Minnesota, the Minneapolis Star Tribune reports:

• The Sexton, a downtown Minneapolis condominium development already caught up in foreclosure and a tangle of lawsuits among its partners, now is at the center of a mortgage fraud investigation by the U.S. Attorney's Office. [Last] Monday, Joseph Huebl of Burnsville pleaded guilty to mail fraud and conspiracy for his role in a scheme to illegally profit from the sale of one of the Sexton's 123 condo units. In his plea agreement, Huebl said he was involved in the scheme along with an unspecified agent of the project's developer, Sexton Lofts. As part of his plea, Huebl, 28, has agreed to cooperate with an ongoing investigation of others suspected of taking part in mortgage fraud at the Sexton, including the unnamed agent of the developer.

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• In the plea agreement, Huebl said he bought a unit in the Sexton in March 2007 for $366,756 at the direction of the developer's agent. Huebl resold the unit the same day for $700,000 to another person he had recruited to be part of the scheme. Huebl admitted helping the new buyer falsify financial information in order to qualify for a mortgage. The developer's agent provided an inflated appraisal to justify the mortgage amount, the plea agreement said. The $333,244 profit from the fraudulent transaction was split between Huebl and the developer's agent, with Huebl receiving $272,980 in two wire transfers, according to the plea agreement.

For more, see Troubled Sexton now caught up in fraud probe (Federal investigators are looking into suspected fraudulent property flipping at the Sexton. One person already has pleaded guilty).

See also, Sexton soap opera continues (Minneapolis condo project faces federal investigation, foreclosure, litigation) (if link expires, try here).

For a story update, see Minneapolis Star Tribune (4-27-08): Sexton Building: 'That place is a mess'.