The U.S. Department of Justice has indicted Minneapolis-based real estate duo Jeffery and Lori Detloff for a wire and mail fraud scheme targeted at companies and financial institutions that owned or had an interest in foreclosed properties, according to a press release on Monday.
The Department of Justice said that from Sept 2007 to June 2015, the couple, who operated as Detloff Marketing and Asset Management Inc., defrauded victim companies, including Fannie Mae and Freddie Mac, by carrying out a scheme where repair contractors were required to pay the couple kickbacks.
According to court documents, Jeffery managed and sold the properties on behalf of the victim companies. One of his responsibilities, as a real estate agent, was to obtain multiple bids from independent contractors who would repair foreclosures before they went on the market.
Jeffrey would then submit bogus bids, awarding the contracts only to those that were willing to pay him a kickback.
Some of the payments the Detloffs received from contractors.
Although Lori didn’t set up the deals, court documents say she was in charge of accounting and bookkeeping, which included sending invoices to contractors for the kickback payments.
“As alleged, the defendants created a scheme to siphon as much money as they could from these properties, no matter the method, no matter the victim,” said FBI Special Agent in Charge Jill Sanborn of the Minneapolis Division in a statement.
“These scams victimize all of us, and the FBI and our law enforcement partners will continue to unravel these schemes and hold accountable anyone found responsible for defrauding the system.”
The couple is facing up to 30 years in jail and a fine of up to $1 million. But, the DOJ says that number may be “increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime. The final outcome depends on whether either of those amounts is greater than the statutory maximum fine.”
“This indictment affirms the Antitrust Division’s commitment to protecting the American housing market from fraud,” added Assistant Attorney Makan Delrahim of the Department of Justice’s Antitrust Division. “We will continue to work with our law enforcement partners to protect the integrity of the competitive process.”
