A deepening mortgage fraud investigation centered on the Minnetonka condominium project by St. Paul developer Jerry Trooien has now netted a fourth real estate professional.
Lindsey R. Loyear, 29, of St. Paul, was charged Friday with one count of conspiracy to commit mortgage fraud related to the kickback scheme at the Cloud 9 Sky Flats.
The U.S. Attorney's office said Monday that it is still investigating the ring but would not say whether Trooien is a target. Federal investigators raided Trooien's St. Paul headquarters in February searching for evidence of fraud, but Trooien has never been charged.
Three other people have already pleaded guilty in the Cloud 9 hustling. One, former broker Sheri L. Delich, who pleaded guilty in June, testified that she was following instructions from Trooien, whose company converted the office building into condos during the real estate boom. Delich's lawyer said she was cooperating in an ongoing federal investigation.
Trooien has adamantly denied Delich's courtroom accusation. Trooien's lawyer said Delich was simply trying to save her own skin.
Trooien's company JLT Group Inc. said that Trooien no longer has any ownership interest in Cloud 9. The building was transferred to the condo association in 2005, it said, and the last of the units were sold in 2007.
Trooien, once one of the area's more prominent commercial real estate developers, is set to exit Chapter 11 bankruptcy soon.
In this latest twist, the U.S. Attorney's office said that from 2006 through most of 2008, Loyear, a former real estate agent and broker, secretly assisted condo buyers with their down payments and took kickbacks equal to about 30 percent of the financed prices. Loyear was personally involved in three sales at Cloud 9, but her involvement branched to sales in at least one other Twin Cities property, according to the charging documents. No other properties were named.
Loyear could not immediately be reached for comment. She filed for Chapter 7 bankruptcy in 2009 listing assets of about $620,000 and liabilities of nearly $1.3 million. Both her Saturn and Jaguar were repossessed.
The number of condo units involved in the overall kickback arrangement has now swelled to 100 -- not all at Cloud 9 -- with kickbacks from the loan proceeds exceeding $8 million, the U.S. Attorney's office said.
If convicted, Loyear could face a maximum of five years in prison.
Jennifer Bjorhus • 612-673-4683