Detloff Marketing, Bidding and Kickback Scheme, Minnesota 2015

A Minnesota couple has pleaded guilty to a long-running fraud scheme that allowed them to reap illicit profits from homes in foreclosure in the Minneapolis-St. Paul area.

According to court documents, from September 2007 and continuing until June 2015, Jeffery J. Detloff, the owner of Detloff Marketing and Asset Management Inc., a real estate company based in Hopkins, Minnesota, conspired to defraud mortgage lenders and guarantors. Detloff steered maintenance and repair contracts to contractors who would pay a kickback to Detloff Marketing, which would then include the kickbacks within bids and invoices sent to the lender or guarantor for reimbursement on maintenance and repairs.

Lori K. Detloff, the accountant responsible for ensuring the kickbacks were paid by contractors to Detloff Marketing, was also involved in the scheme. In all, Detloff Marketing received over $291,505 in kickbacks.

“For years, the defendants orchestrated and executed a scheme that allowed them to reap illicit profits from homes in foreclosure,” said Assistant Attorney General Makan Delrahim of the Antitrust Division. “These plea agreements demonstrate the Justice Department’s continued commitment, and that of our law enforcement partners, to protect victims, including Fannie Mae and Freddie Mac, from those who subvert competition using false, fraudulent, and sham bids.”

Detloff Marketing and Jeffery Detloff pleaded guilty to Count 1 of the Indictment, which charged a conspiracy to commit mail and wire fraud affecting a financial institution. Lori Detloff pleaded guilty to aiding and abetting the principal offense described in Count 4 of the indictment, mail fraud affecting a financial institution. As part of their plea agreements, the Antitrust Division agreed to move to dismiss the remaining counts against Detloff Marketing, Jeffery Detloff, and Lori Detloff upon sentencing.

The defendants agreed to pay restitution in the amount of $291,505. The terms of the plea agreements are subject to the approval of the Court. The conspiracy and fraud charges carry a maximum penalty of 30 years in prison and a fine of $1,000,000. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The plea agreements announced today are the result of a federal investigation of housing repair contracts in the Minneapolis area. The investigation is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Minneapolis Division. Anyone with information on customer allocation, bid rigging, price fixing, or other anticompetitive conduct related to the real estate industry in Minnesota should contact the Antitrust Division’s Chicago Office at 312-984-7200.

Defendant: Detloff Marketing and Asset Management Inc. (Detloff Marketing)

Criminal Charges: Conspiracy to commit mail and wire fraud affecting a financial institution, mail fraud affecting a financial institution

City and State: Hopkins, Minnesota

Date: June 2015

Sentence: Plea agreements, restitution of $291,505

Dollar Amount: $291,505

Source: https://www.justice.gov/archives/opa/pr/minnesota-couple-pleads-guilty-long-running-fraud-scheme