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Missouri real estate developer indicted on fraud charges in commercial rehab project

Aug 19, 2010

The United States Attorney’s Office has announced that John R. Steffen was indicted on fraud charges involving his scheme to defraud The Business Bank of St. Louis by pledging Brownfield Remediation Tax Credits as collateral on a loan, and selling them to use the proceeds for other projects. According to the indictment, Steffen is in the business of construction of residential and commercial real estate as well as the rehabilitation and development of commercial real estate primarily in the St. Louis area. This work is mainly done through Pyramid Construction Inc., and MB Lofts LLC, both of which are controlled by Steffen. One of the projects undertaken by Steffen through MB Lofts is the redevelopment and rehabilitation of the Metropolitan Building in St. Louis, Mo., for commercial purposes and to construct a hotel. As part of the financing of this renovation project Steffen and MB Lofts received Brownfield Remediation Tax Credits from the State of Missouri Department of Economic Development. These tax credits provide a State of Missouri financial incentive to cleanup and redevelop commercial and/or industrial sites that are contaminated with hazardous substances, and have been abandoned or underutilized for at least three years. The recipient of these tax credits may assign, sell, or transfer them. In March 2007, MB Lofts LLC received authorization to receive up to $1,424,818 in tax credits for the rehabilitation of the Metropolitan Building. The indictment alleges that in May 2007, Steffen used the tax credits as collateral to obtain a loan from The Business Bank of St. Louis to MB Lofts LLC in the amount of $1,115,633. The purpose of the loan was for environmental cleanup and remediation of the Metropolitan Building. On Dec. 21, 2007, Steffen fraudulently sold $827,415 of tax credits without the knowledge of The Business Bank, and used the proceeds for other projects. Steffen of St. Louis, was indicted by a federal grand jury on one felony count of bank fraud. If convicted, bank fraud carries a maximum penalty of 30 years in prison and/or fines up to $1 million. This case was investigated by the Federal Bureau of Investigation (FBI) and the U.S. Postal Inspection Service. Assistant United States Attorneys Michael Reap and Steve Muchnick are handling the case for the U.S. Attorney’s Office. For more information, visit http://stlouis.fbi.gov.
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Aug 19, 2010
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