Minnetonka resident Steven Carver, who was a real estate broker and operated Carver & Associates Real Estate in Maple Grove, allegedly orchestrated a kickback scheme through which lenders lost $3.3 million and that resulted in the foreclosure of 18 homes.
A local real estate broker faces civil charges for allegedly orchestrating a mortgage scheme through which lenders lost $3.3 million.
Steven Carver, a 43-year-old Minnetonka resident, allegedly arranged 18 property sales at inflated prices that resulted in nearly $6 million in fraudulent mortgages, the Minnesota Department of Commerce said Wednesday. Carver was a licensed real estate broker who operated Carver & Associates Real Estate in Maple Grove and whose license lapsed last summer.
In each of the 18 cases, which date back to 2005, Carver allegedly arranged purchase agreements for tens of thousands of dollars more than each home was worth, delivered kickbacks from loan proceeds to the buyers, and collected tens of thousands of dollars in inflated commissions for himself.
All of the properties ultimately ended in foreclosure or short sales, according to the Commerce Department.
Charges include allegations that Carver bundled multiple home purchases and omitted information on loan documents in order to mislead lenders. The kickback payments were camouflaged as rent guarantees or carry-back loans, the Commerce Department said.
In one instance, Carver allegedly brokered a bundled purchase of six homes with the price of each marked up by $40,000 to $60,000 above the market value. That resulted in a commission for Carver exceeding $41,000 and kickbacks totaling more than $155,000.
The Commerce Department also alleges that Carver tried to trick its investigators, telling them last year that he was in Georgia on his way to “sail around the ocean for a couple of years.” When department investigators dropped by his Minnetonka house, they found Carver cleaning the swimming pool.
“The economic recession and depressed home values have created the perfect storm for mortgage fraud and other real estate scams in Minnesota,” Commissioner Mike Rothman said in a statement. “Our Enforcement Division has been vigilant in taking swift and definitive action against scam artists who take advantage of consumers. We are focused on weeding out bad actors and restoring trust and stability in the real estate market.”
Carver’s lawyer, Tim Webb, issued a statement Wednesday saying the case has no merit and that the Commerce Department “mischaracterizes” what happened, according to a Star Tribune report.
“He had no contact with the lenders in these transactions and certainly had nothing to do with ‘omitted information on loan documents’ or ‘fraudulent mortgages’ as alleged by the [Department of Commerce],” Webb reportedly said in the statement.
Webb told the Star Tribune that Carver was financially devastated by the collapse of the real estate market and “lost everything.”
A prehearing conference is scheduled for February 16 before an administrative law judge in St. Paul.
—Nataleeya Boss
(nboss@tcbmag.com)