Skip to main content

Two plead guilty in Minneapolis in $2.5 million mortgage fraud scam
Aug 11, 2010

Two Prior Lake, Minn. men have pleaded guilty in federal court in Minneapolis for their roles in a scheme that defrauded mortgage lenders out of more than $2.5 million by causing them to make loans based on false information. Appearing before United States District Court Judge David S. Doty, Beau Wesley Gensmer pleaded guilty to one count of wire fraud and one count of money laundering in connection to that crime. Christopher Glenn Kennedy pleaded guilty to the same charges on Aug. 6, 2010. Gensmer and Kennedy were indicted on April 21, 2010. A third co-defendant pleaded guilty earlier in the case. In their respective plea agreements, Gensmer and Kennedy admitted that from July of 2007 to September of 2008, they executed the mortgage-fraud scheme. They admitted that in April of 2007, a multi-unit condominium building was built in Prior Lake by a development company owned by one of Gensmer’s relatives. The units were listed for sale but were removed from the market after only a couple of units were successfully sold. Later during the summer of 2007, Gensmer and Kennedy admittedly solicited three individuals to purchase multiple condominium units as “investments.” Gensmer and Kennedy assured the “investors” that they would pay nothing to buy the properties because the down payments and monthly mortgage payments would be provided to them by Gensmer and Kennedy. Moreover, Gensmer and Kennedy admitted they recruited the investors by telling them that the condos would be rented for a time but ultimately sold at a profit, and that the investors would share in that profit. In order for the investors to qualify for their mortgage loans, Gensmer and Kennedy caused accountants to prepare tax returns that reflected inflated income figures. Those returns and other fraudulent documents were then knowingly submitted to potential mortgage lenders by the defendants. Gensmer and Kennedy also temporarily deposited money into the bank accounts of some of the investors to make it appear to potential lenders that the investors had more cash on hand than they actually did. As a result of those actions, ten mortgage lenders funded the purchase of 18 condominium units by the three investors. Eventually, Gensmer and Kennedy stopped supplying the property purchasers with monthly mortgage payments, causing the loans to go into default and then into foreclosure. The defendants admitted that due to their actions, mortgage loan lenders wire transferred funds on 15 different occasions. The men also admitted that on two occasions, they used some of those fraudulently obtained funds as down payments to a title company for additional condo purchases, and that the title company was owned in part by individuals with an ownership interest in the entity that originally constructed the condo building. For their crimes, the defendants face a potential maximum penalty of 20 years in federal prison on the wire fraud charge and 10 years on the money laundering charge. Judge Doty will determine their sentences at a future hearing, yet to be scheduled. This case is the result of an investigation by the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS)–Criminal Investigation Division, and the Prior Lake Police Department. It is being prosecuted by Assistant U.S. Attorneys Tracy L. Perzel and William J. Otteson. For more information, visit
Aug 11, 2010
6 Federal Agencies Seek Comment On Proposed Rule For AVMs

The rule is intended to ensure the credibility and integrity of Automated Valuation Models.

FHA Proposes New Program To Help Struggling Homeowners

Legal expert questions whether agency has authority to implement the program.

Fitch Places Fannie, Freddie On Negative Ratings Watch

Ties credit rating to outcome of U.S. debt limit negotiations.

FHFA Director Strongly Defends New GSE Pricing Framework 

Tells House committee it’s “simply not true” that financially stronger borrowers are subsidizing others.

MBA CEO Criticizes Government Response To Economic Challenges

CEO Bob Broeksmit calls for sensible Regulation, clarity, and support for the mortgage industry.

Freddie Mac Updates Income Assessment Tool To Use Digital Pay Stubs

Says new capability helps lenders calculate borrower income more quickly and precisely.