A Hennepin County jury has convicted two Twin Cities men of racketeering in a major mortgage fraud case.
The jury convicted Burton Joseph and Richardt Fleischmann, who prosecutors say worked with others to defraud mortgage lenders. The two were affiliated with the Minnetonka-based National Investment Group.
At the height of the real estate bubble in 2006, the men solicited buyers in ads touting what appeared to be a legitimate real estate investment and then lied to banks to qualify for multiple home mortgages, said Amber Hawkins, an assistant attorney for Hennepin County.
"The buyer's income was inflated on the loan application, sometimes double what that person actually made, the buyer's other debts were not disclosed," she said.
The case involved 130 mostly suburban Twin Cities homes that were eventually foreclosed on with a loss to lenders of $20 million. Hawkins said the men face paying restitution and up to six years of prison time each.
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