Photo courtesy Saturday's online Star Tribune. And if you enlarge it, the water tower is "New Prague" and not "City of Ramsey." Not that you could tell from the fungible housing pictured. Strib has had recent ongoing coverage of the south suburban Twin Cities metro mortgage foreclosure problems centered upon the U. S. Attorney's actions involving builder and promoter-developer, Parish Marketing and Development Corp. - see Saturday's quite thorough Strib account, here, see, also, here and here. There has been further coverage in recent days, for example, here, here, here and here. And a few blogs have the story, e.g., here, where I got some of the other links and where there's a correct note, Parrish Marketing is based in Eagan, not New Prague, where many of the troubled homeowners live in "Prague Estates," a particularly hard hit detached single family [not shared wall] subdivision.
And it is in a place like Ramsey in the north end, a suburban setting where one commentator said "you can get away with more," but this time not the Town Center, but:
[...] in the Twin Cities' southern suburbs caught in what state regulators believe is the largest case of mortgage fraud in Minnesota history.
The alleged scheme involves at least one established home builder, Parish Marketing, and more than a dozen real estate professionals who allegedly inflated property values and falsified documents, according to sources close to the investigation.
Investigators suspect Parish Marketing used so-called straw buyers, often relatives, to purchase multiple homes at inflated prices. The scheme unraveled as the housing market slowed, new buyers could not be found and houses ended up in foreclosure.
That this alleged fraud has occurred in small, distant suburbs such as New Prague and New Market, far from the urban neighborhoods that have been the traditional target of such schemes, comes as no surprise to market observers. "The lights may be too bright in cities like Minneapolis, so they are moving out to rural areas and two-tier cities," said Merle Sharick, vice president of Mortgage Asset Research Institute, a firm in Reston, Va., that verifies parties in mortgage transactions. "You can get away with more in those places."
By Chris Serres, Star Tribune
Last update: September 08, 2007 – 8:29 PM
If Bruce Nedegaard were alive, would he dispute that last bolded assessment? Would either of the Kuraks dispute that? Would John Feges, with files in the courthouse in Anoka, from the 1990's? Feges who was close to Nedegaard and the Kuraks.
A subheadline, of Saturday's story, "The FBI Came Knocking."
Would Feges and the remaining Nedegaard people on Central Avenue, in Columbia Heights, or folks at the originating North Branch bank for the Nedegaard financing, dispute that subheadline assessment? Not likely.
And a question, are you sure you have good title to your home if you had the deal closed through Powerhouse Title?
That was the title and closings company that Pioneer Press described as dominated by Bruce Nedegaard and his lender-affiliates, and shut down already by the Commerce Department, which is investigating the south-burbs situation and other situations in the greater metro area - read the Strib's latest, for detail, or let me continue Saturday's Strib online coverage:
Bill Walsh, a spokesman for the state department of commerce, acknowledged that state regulators are investigating other large cases of mortgage fraud in several other Twin Cities suburbs, which he declined to identify for fear of tipping off the perpetrators.
The fact that the alleged scheme involves a reputable home builder makes it all the more unsettling. Parish Marketing was founded in 1980 and has built more than 2,000 homes in the Twin Cities' southern suburbs. Some of the houses were sold at prices in excess of $1 million.
Michael Alan Parish, 62, who runs the company with his wife, Ardith Ann Parish, 61, declined to comment and referred questions to their attorney, Ryan Pacyga.
Pacyga said the homebuilder built too many upscale homes at a time when demand was in decline. The situation forced the company to "seek nontraditional methods to move the properties," said Pacyga, who declined to be more specific. "This is a case that the real estate world will talk about for a long time," he said.
More than 30 houses built by Parish Marketing in New Prague and New Market have fallen into foreclosure, according to county officials. And more are expected.
In New Prague (population: 6,400), it's hard to go anywhere without bumping into someone who knows a person or business affected by the alleged mortgage fraud.
At a housing development called Prague Estates, where houses are priced at $300,000 to $500,000, rows of Parish homes sit vacant or unfinished. Some are surrounded by knee-high weeds. Several contractors who worked for Parish said they are owed more than $25,000 each. The New Prague Times is running three pages of foreclosure notices a week, twice the usual number.
Bruce Nedegaard, let us not forget, was a reputable and respected builder of quality high-end homes for a comparable time span, and an award-winning builder of single family homes and a local building council official, before being lured into the Ramsey Town Center dealings that were a big part of his fiscal undoing, before he and spouse died weeks apart late in 2006. There are parallels. Shady real estate closings operations or practices, near the end of the ride, as unraveling of the hoax progressed. That was the reported situation, according to Pioneer Press, with the condo-lofts project Nedegaard spear-headed in Columbia Heights, which reportedly was the dealing that first attracted federal search warrant attention.
The Grateful Dead sang, "At Least We're Enjoying the Ride." Some, in Ramsey dealings, might still treasure that as a theme song.
The government said the alleged mortgage fraud involves nearly 200 properties, $100 million in mortgage proceeds and as much as $50 million in losses. Some straw buyers bought more than 50 properties, according to court records. Real estate records show one investor, Christopher Troup, the Parishes' son-in-law, was involved in at least 29 transactions with Parish Marketing. Troup could not be located for comment.
State investigators suspect these straw buyers bought houses from Parish at inflated prices, often using falsified loan documents. It appears they recruited mortgage brokers, loan officers, appraisers, even notary publics, to arrange fraudulent loans. "It's similar to other cases we've investigated, where everyone at the table knew what was going on," Walsh said.
Two families said they bought houses from Parish under contract-for-deeds, only to discover later that the houses were sold to someone else and their payments had vanished. Shannon and Will Whitecotton said they made a $5,000 down payment on a home in Prague Estates as well as about $45,000 in monthly payments.
However, the contract-for-deed was never registered at the county, which meant there was no record they even lived in the home, Shannon Whitecotton said. When they went to pay off the contract-for-deed, the Whitecottons were told they had no claim to the house. An eviction notice arrived about two weeks later. "We were dumbfounded," she said.
The Whitecottons said they later discovered that title to the home at 1125 Horseshoe Lane in New Prague was under the name Bonnie Bauer, who in property records is listed on at least 23 transactions with Parish.
"I think [Mike Parish] was double dipping," Shannon Whitecotton said. "He was pocketing the monthly payments, selling the homes and then sitting back and playing banker."
Bauer, Ardith Parish's sister, according to Pacyga, could not be located for comment.
This week federal regulators handed down two indictments related to the scheme. Ramiz Yousef Saadeh, a U.S. Bank loan officer, admitted to providing falsified verifications of deposits for buyers, to make them appear qualified for loans, when the money was coming from homebuilder's funds. Pacyga later identified Parish as the homebuilder.
Kristopher Robbins, a closing agent and licensed notary public, admitted he closed scores of property transactions "in which individuals executed loan documentation in the names of other persons who were actually purchasing the properties."
Both men pleaded guilty and agreed to cooperate with the investigation.
And that sounds a lot like getting a plea to a single count from the CFO of Ramsey Town Center LLC and another Nedegaard venture, condo lofts in Columbia Heights, where there were shady down-payment situations - similar to scaring up downpayment money as reported in the south-end scam. Strib ends, including my chosen headline text:
In New Prague, residents are concerned the rash of foreclosures will drive down housing prices across the city. Some residents want city officials to hold a town hall meeting. "There aren't enough people in this town to fill all those vacant houses," Guerrette said. "So we've got to find a way to bring people here. Soon."
And it's not for me to say the Kuraks did not pass some kind of litmus test while that seat was held as the Village of Sunfish Lake and the Ramsey Town Center were being kick-started. After all, County Attorney M.A. Johnson was on the planning commission then, not quitting until after those efforts moved through that body, and he had no enforcement troubles then about Minn. Stat. Sect. 471.87, which an online AGO quotes and discusses, the statute saying:
Except as authorized in section 471.88, a public officer who is authorized to take part in any manner in making any sale, lease or contract in official capacity shall not voluntarily have a personal financial interest in that sale, lease, or contract or personally benefit financially therefrom. Every public officer who violates this provision is guilty of a gross misdemeanor.
And City Attorney Goodrich did procure a legal opinion. So, that must be a litmus test of sorts. Opinions have been procured against citizen-initiated referendum reform also, and so, the process gets honed for cutting. Go figure.