Minneapolis To Take Over, Rehab, Resell 141 Mostly Vacant Homes

In Minneapolis Minnesota, Minnesota Public Radio reports:

• Minneapolis Mayor RT Rybak says the city will take control of 141 mostly vacant rental homes on the Northside. A court-appointed receiver will manage the properties and work to rehab and resell them. The homes are associated with T.J. Waconia, a company the city is suing for mortgage fraud. The city's lawsuit accuses Waconia of buying homes, converting them to rental properties, collecting rent and then abandoning the properties.

For more, see City to acquire northside homes for rehab.

See also:

• Minneapolis Star Tribune: Minneapolis takes charge of T.J. Waconia homes in fraud case (TJ Waconia, sued by Minneapolis, was ordered to turn over 141 properties. The city wants to gain ownership, and may sell or rent them),
• Pioneer Press: Waconia's N. Mpls. homes get overseer (City sees ruling as victory in suit over mortgage fraud),
• Twin Cities Finance and Commerce: Judge appoints receiver for TJ Waconia's Minneapolis homes (Firm faces city suit, federal mail fraud charge),
• FOX-TV Channel 9: Judge Orders 141 North Minneapolis Properties to 3rd Party (Mpls neighborhoods filed lawsuit vs TJ Waconia over foreclosures).

Go here for other posts on the alleged TJ Waconia house flipping operation.

Minneapolis Groups Sue Local House Flippers For Mortgage Fraud; Alleged Scam Involved 140 Homes, Most Vacant & In Foreclosure

In Minnesota, the Pioneer Press reports:

• Three north Minneapolis neighborhood groups, backed by the City of Minneapolis, are suing a Roseville company called TJ Waconia for mortgage fraud involving 140 homes, most of them now in foreclosure or abandoned. At a press conference today in north Minneapolis, Mayor R.T. Rybak said they are suing for unspecified damages, as well as to retake the houses themselves. There is no dollar amount on the damages to the city and neighborhoods in the lawsuit, which was filed in Hennepin County District Court, and it isn't clear how much money can be obtained from the company. The lawsuit doesn't name the lender who made many of the mortgages to straw buyers.

• Nonetheless, the lawsuit is the latest example of local governments swinging back at what they say are the villains in a foreclosure crisis that, for them, has become a community emergency. The cache of neglected and boarded up houses has blighted the area, dragging down neighboring property values, neighborhood leaders told reporters.

***

• The lawsuit names TJ Waconia LLC and various affiliates including TJ Holdings LLC, Total Title LLC, Absolute Appraisal LLC and CityWide Management LLC. Owners Thomas J. Balko, 37 of Rogers, and Jon E. Helgason, 44, of Chisago are also named. Balko was a licensed appraiser and Helgason a licensed real estate agent and broker, the lawsuit said.

• The lawsuit charges that between 2003 and 2005 Balko and Helgason systematically bought and flipped 140 houses in north Minneapolis, using inflating appraisals. Within a few months of buying, the men would flip the houses, selling them at significantly higher prices to buyers believed to be either straw buyers or investors affiliated with Balko and Helgason. The homes were then rented out to people, but the mortages left unpaid. [...] More than half of the 140 homes are in some stage of foreclosure, and nearly 110 are vacant, according to Mary Cullen Yeager, a partner at Faegre & Benson representing the plaintiffs.

***

• The groups are charging TJ Waconia with one count of violating a state private nuisance statute, four counts of violating the state Tenants Remedies Act by creating nuisance properties, one count of violating the state's Consumer Fraud Act and charges Balko and Helgason with two counts each of racketeering.

For more, see Minneapolis groups sue Roseville firm over foreclosures.

See also:

• Minneapolis Star Tribune: Minneapolis sues firm over mortgages: 'It's personal',
• Fox News 9: Minneapolis Files Lawsuit Against Firm Linked to North Side Foreclosures (City joins neighborhoods in suit against TJ Waconia),
• KARE-TV Channel 11: Minneapolis sues company over Northside foreclosures.

Go here and go here for other posts on vacant homes leaving its mark on neighborhoods. neighborhood destruction from foreclosures zach

Minneapolis Feds File Criminal Charge In TJ Waconia Mortgage Fraud Investigation

In Minnesota, the Minneapolis Star Tribune reports:

• A Roseville firm involved in hundreds of real estate deals in the Twin Cities area was charged Friday with a single count of mail fraud resulting from a federal mortgage fraud investigation. The charge suggests that a plea deal may have been reached and that federal attorneys may be looking at charges higher up the lending chain, according to those who have prosecuted white-collar crime. The U.S. attorney's office filed the one-page charge against appraiser Thomas J. Balko, 37, of Rogers; Jonathan E. Helgason, 45, of Chisago City; and TJ Waconia, the company they formed in 2000. They could not be reached Friday night.

• "It sounds minimalist," said City Council Member Don Samuels. He has compared the damage he said the company did in at least 140 deals in his and other North Side Minneapolis neighborhoods to the damage caused by drug dealers. But a former assistant federal prosecutor, Mark Larsen, said filing the charge without an indictment strongly suggests a plea deal. Such deals often require testimony against others involved in a criminal activity, described in this case as a three-year mortgage fraud scheme.

For more, see Real estate company charged in fraud scheme (A Roseville firm involved in quick-turn deals faces one count, but it appears likely that charges for other lenders are ahead).

Go here for other posts on the alleged TJ Waconia house flipping operation.

Two Plea Guilty In Alleged Twin Cities Flipping Scam Involving 162 Properties, $35M In Mortgage Loans

In Minneapolis, Minnesota, the Minneapolis Star Tribune reports:

• Two men behind one of the largest mortgage fraud schemes to hit the Twin Cities area pleaded guilty to mail fraud Thursday in federal court. Thomas J. Balko and Jonathan E. Helgason, co-owners of TJ Waconia, pleaded guilty to a three-year scheme that involved 162 properties and $35 million in mortgages. Most of those properties were in north Minneapolis where a city lawsuit charges that the men and their firm laid waste to three neighborhoods, leaving blocks dotted with vacant, deteriorating housing. They turned 141 of the properties over to a court-appointed receiver this week.

For more, see Two plead guilty in $35 million mortgage fraud scheme.

See also, Twin Cities Finance and Commerce: TJ Waconia owners plead guilty to mortgage fraud.

Go here for other posts on the alleged TJ Waconia house flipping operation.

Minnesota Feds Investigating Mortgage Company Linked To Suspicious Deals

In Minneapolis, Minnesota, WCCO-TV Channel 4 reports:

• Newly-released documents confirm that the FBI is investigating [TJ Waconia,] a Roseville, Minn. company for alleged mortgage fraud. The case involves hundreds of properties in several counties. If the allegations are proven, it would be one of the largest cases of its kind in the metro.

• "The number of people involved in the scheme was really very large," said Barbara Johnson, President of the Minneapolis City Council. Johnson said for too long she had been hearing from neighbors on the north side who were concerned about real estate transactions involving the same investment company. Documents and data were compiled for months then Johnson looked for someone willing to look into the complex case.

Johnson said she "shopped" her information around to state and local prosecutors before finally getting the FBI to take the case. Complaints of boarded-up foreclosures throughout the area from her constituents compelled her to take action. For more, see FBI Investigates MN Mortgage Company For Fraud. Go here for the WCCO Channel 4 video coverage.

See also, FBI targeting Roseville company in fraud case (Minnesota Public Radio).

Minneapolis City Council Advisory Panel Recommends "Putting The Squeeze" On Foreclosing Lenders, Landlords In Attempt To Address "Empty Home Epidemic"

In Minnesota, the Minneapolis Star Tribune reports:

• With foreclosures exploding, Minneapolis City Hall is stepping up the pressure on housing violations. A City Council panel Wednesday took three actions aimed at problematic properties as the number of new foreclosures in the city last month hit 344 properties. The committee recommended that the full council:

1. Revoke a rental license for an unprecedented 45 rental properties associated with Roseville-based TJ Waconia, a firm that the FBI has said it is investigating for mortgage fraud,
2. Triple the annual fee charged against vacant and boarded housing to $6,000 in an effort to recover some of the city's costs for dealing with them,
3. Impose a new $1,000 fee on residences that convert to rental units that intended to pay for an immediate inspection to make sure they meet the city's rental licensing standards.

• Besides running a $1.4 million problem properties unit, the city incurs police, fire, rubbish cleanup and other expenses at vacant houses, Inspection Director Henry Reimer said. Total costs exceed $2 million. [...] The full council plans to act on the recommendations at its Feb. 29 meeting.

For more, see Minneapolis puts squeeze on problem housing (With foreclosures booming, City Hall recommended three actions to combat the empty-house epidemic).