Two Charged In Alleged Foreclosure Rescue Scam Involving $4M+ In Fraudulently Obtained Loans, Say Minnesota Feds

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:

• An Associated Bank employee and a real estate company owner from Minnetonka were charged Wednesday by a federal grand jury in a conspiracy to defraud the bank on at least 21 loans totaling more than $4 million. Eric Richard Krahnke, 50, of Ramsey, and Michael Ian Striker, 55, of Minnetonka, jointly face one count of conspiracy and 21 counts of bank fraud. Each man also faces one of two separate counts of money laundering related to the alleged conspiracy.

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• Between March and October 2003, the indictment says, Striker submitted 21 loan applications through Krahnke that contained false or misleading information; the applications overstated his and U.S. Equities' finances. Striker also allegedly submitted inflated appraisals to justify loan amounts exceeding the true market value of the properties.

According to the indictment:

• In the case of many of these Loans, the properties were not vacant rehab properties [as was represented to the lender], but rather were homes that financially-distressed individual homeowners were were still living in. The homeowners had conveyed their title to Striker, or businesses that Striker was working with, under a contractual agreement whereby they re-purchased the residence on a contract for deed. At the same time these homeowners thought that Striker was helping them to stay in their homes, Striker was falsely representing to the bank an intention to rehab and re-sell these properties.(1)

For more, see:

• Real estate loans bring two indictments (A former bank officer and a real estate investor face federal fraud charges),
• Indictment - U.S. v. Krahnke, Striker.

(1) Indictment, paragraph 7(g).