MN Attorneys indict two Men in Large Scale Mortgage Fraud

United States Attorney for the District of Minnesota B. Todd Jones announced the federal indictment against Michael Anthony Prieskorn and Richard Mathew Laho on charges of mortgage fraud. Mr. Prieskorn was arrested in Florida.

Mr. Prieskorn, age 35 from Ellendale, Minnesota and Richard Laho, age 54 from Buffalo Minnesota are charged with creating a mortgage scheme which netted Prieskorn over five million dollars from investors. The scheme involved the purchase of over seventy properties in Minnesota and Florida between December 2006 and April of 2007.

Mr. Prieskorn and Mr. Laho are both facing twenty three counts of wire fraud, one count of mail fraud and one count of conspiracy to commit wire fraud. Mr. Prieskorn was also charged with two counts of engaging in monetary transaction. Mr. Laho has not been arrested as of today and has been summoned.

The indictment is currently still under seal however it is believed Mr. Prieskorn and Mr. Laho conspired to acquire mortgage loan proceeds by processing and submitting fraudulent residential mortgage applications on properties in Minnesota and Florida. It is believed that back in 2006 Mr. Prieskorn and Mr. Laho using the business name Blackstone Sales and Maine Estates contracted with builders to obtain several residential properties in Florida and Minnesota at discount prices. The men worked together to petition investors that had good credit to purchase properties and it is alleged that they told the investors that the investment into the properties were completely risk free. It is also alleged that the men informed the investors they would received five thousand dollars for every property that was purchased in the investors name using the investors’ credit history.  The investors were informed that Blackstone and Maine Estates would maintain the properties as well as make the monthly mortgage payments, other related expenses and that the properties would be sold for profit.

Mr. Prieskorn and Mr. Laho also are alleged to have assisted investors in depositing funds into bank accounts in order to further the fraud and deceive mortgage lenders into believing that those investors had sufficient funds to purchase the properties involved. Investors were told prior to closing not to disclose the true nature of the residential transactions. HUD-1 Settlement statements were altered and submitted to mortgage lenders.

Mr. Prieskorn received management fees that ranged from eighteen to two hundred twenty eight thousand dollars per real estate transaction.  He netted over five million from the scheme. Investors in the scheme were told that Mr. Prieskorn would be making payments on the properties for nine months but he never did. The properties involved fell into foreclosure or were sold on short sale transactions which resulted in investors losing their good credit ratings.

Mr. Preiskorn sent letters to investors in the scheme in August of 2007 that stated Blackstone and Maine Estates had been purchased by Sydney and Lloyds.

Mr. Prieskorn and Mr. Laho face a sentence of up to maximum of twenty years in federal prison for each count of wire fraud, twenty years for each count of mail fraud, and twenty years for each count of conspiracy. Mr. Prieskorn faces a possible additional ten years for each count of monetary transaction.

The Internal Revenue Service-Criminal Investigation Division along with the Eagan Police Department, The Minnesota Department of Commerce, the United States Secret Service, The Minnesota Financial Crimes Task Force and the Minnesota Bureau of Criminal Apprehension investigated the case.

The case will be prosecuted by Assistant United States Attorney Tracy Perzel.