Albertville Man Found Guilty For Role in Mortgage Fraud Scheme

A federal court jury Thursday convicted the ringleader of a mortgage fraud scheme that caused losses in lenders to pile up to the tune of $4.6 million.

Trial evidence showed John Anthony Spencer, 31, brokered fraudulent loans that were used by recruited purchasers to buy residential real estate at inflated prices in areas of St. Paul, North Minneapolis and Albertville.

Spencer was found guilty on one count of conspiracy to commit mortgage fraud through interstate wire, 10 counts of wire fraud, and one count of money laundering. He was indicted, along with Dols and Lenton, back in December 2010.

According to the indictment, Spencer organized illegal transactions that generated proceeds that greatly exceeded what the sellers were content to accept as full purchase prices for the properties; Spencer and two accomplices pocketed the extra money after transactions were brought to fruition, along with kickbacks to the property buyers.

Spencer, an Albertville resident, recruited Patrick A. Dols, a fellow mortgage banker at Mortgage One, and Bryan J. Lenton, a real estate appraiser, to create ring that would sell condominium properties on Fisk Street in St. Paul , four condo units on a Dayton Avenue property in St. Paul, a home in Albertville and two investment properties in Minneapolis.

According to evidence presented at his two-and-a-half week trial, Spencer, who worked as a mortgage broker at Minnesota One, agreed to assist the owner of a condo unit on Fisk Street to sell the units at inflated prices. He recruited Lenton to appraise each unit at the inflated price. Specner then recruited a “straw buyer” to purchase units with loan proceeds, provided based on a fraudulent loan application by Spencer and Dols.

Spencer also arranged for nearly a quarter of a million dollars in payments to AC Standard Construction for purported work on two of the five units. Investigators determined no work was actually done, and, in fact, AC Standard was northing more than a sham company through which the three men involved received kickbacks.

In April 2006, investigations showed Spencer engaged in similar conduct with a co-conspiring real estate developer who had been unable to sell six homes in north Minneapolis. Two buyers were recruited for the properties, again with loan proceeds fraudulently brokered by Spencer and Dols.

Federal court also proved Spencer conducted a third scam with the condominium owner on Dayton Avenue in St. Paul. After closing on four units, Spencer caused more than $320,000 to be paid into a sham homeowners’ association account (common with condo units), which was then used to pay out more kickbacks to Spencer and the buyers.

Lenton, 32, of Oakdale, pleaded guilty to one count of conspiracy back on March 8. Dols 38, Minneapolis, entered his guilty plea to charges of conspiracy on March 1. Both men provided statements to investigators that admitted to their roles in the fraud ring.

The maximum penalty the two men face for conspiracy is five years in prison.

Spencer was also convicted of bank fraud after the trial showed he borrowed more than $700,000 from Anoka-Hennepin Credit Union to close on his home in Albertville. He received a $73,000 kickback at closing (without AHCU’s knowledge), and he took out second mortgages on two investment properties secured via phantom equity.

For his crimes, Spencer faces a potential maximum penalty of five years in prison on the conspiracy charge, 20 years on each wire fraud count, and 30 years on the bank fraud charge.

United States Court Judge David S. Doty will determine the sentences of all three men at a future hearing, yet to be scheduled.

The case against the three men is a result of investigation by the Internal Revenue Service-Criminal Investigation Division. Asst. U.S. Attorney David J. MacLaughlin is the lead prosecutor.