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Two Sentenced in $2.5 Million Minnesota Mortgage Fraud Scam
Nov 19, 2010

The second of two Prior Lake, Minn. men was sentenced in federal court in Minneapolis for his role in a scheme that defrauded mortgage lenders out of more than $2.5 million by causing them to make loans based on false information. United States District Court Judge David S. Doty has sentenced Christopher Glenn Kennedy to 48 months in prison on one count of wire fraud and one count of money laundering in connection to that crime. On Nov. 10, 2010, Judge Doty sentenced Beau Wesley Gensmer to 36 months in prison on the same charges. Both men were indicted on April 21, 2010, and pleaded guilty in August of 2010. A third co-defendant has pleaded guilty in the case and awaits sentencing. In their respective plea agreements, Kennedy and Gensmer admitted that from July of 2007 to September of 2008, they executed the mortgage fraud scheme. 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 were purchased. Later, during the summer of 2007, Kennedy and Gensmer solicited three individuals to purchase multiple condominium units as “investments.” Kennedy and Gensmer assured the “investors” they would pay nothing to buy the properties because the down payments and monthly mortgage payments would be provided to them by the two of them. Moreover, they recruited the investors by telling them 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 mortgage loans, Kennedy and Gensmer caused accountants to prepare tax returns that reflected inflated income figures. Those returns and other fraudulent documents were then submitted to potential mortgage lenders by the two men. They 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, 10 mortgage lenders funded the purchase of 18 condominium units by the three investors. Eventually, Kennedy and Gensmer stopped supplying the property purchasers with monthly mortgage payments, causing the loans to go into default and then into foreclosure. Following the sentencing, Ralph S. Boelter, Special Agent in Charge of the Federal Bureau of Investigation’s Minneapolis Field Office, said the aggressive investigation of mortgage fraud schemes remains a high priority for the FBI. Kelly Jackson, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division’s St. Paul Field Office, said, “These types of crimes create a significant loss of tax revenue, drive buyers into foreclosure, leave lenders burdened with bad loans and neighborhoods with abandoned and deteriorating properties. IRS-CID is committed to pursuing individuals who create such havoc.” The defendants in this case 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 downpayments 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. This case was the result of an investigation by the FBI, the IRS-CID, and the Prior Lake Police Department. It was prosecuted by Assistant U.S. Attorneys Tracy L. Perzel and William J. Otteson. For more information, visit
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