2 Plead Guilty to Mortgage Fraud Charges

Allison Tussey —  August 10, 2010 — 2 Comments

Beau Wesley Gensmer, 28, and Christopher Glenn Kennedy, 31, two Prior Lake, Minnesota, 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, Gensmer pleaded guilty to one count of wire fraud and one count of money laundering in connection to that crime. Kennedy pleaded guilty to the same charges on August 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, the two defendants 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, the Internal Revenue Service-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.

Note, this law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The Task Force was established to wage an aggressive, coordinated, and proactive war on financial crimes. It includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch; and along with state and local partners, its members will investigate and prosecute significant financial
crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

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Allison Tussey

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2 responses to 2 Plead Guilty to Mortgage Fraud Charges

  1. We are going to court September 14,2010 in Greenville NC Federal Court to see the woman who defrauded 7 investors (one of them being my boyfriend) out of hundreds of thousands of dollars, to her change of plea hearing.

    She admitted in county court here to fraud last year, and thought she could not be charged criminally. But she was wrong:)

    She now has charges of fraud by wire and money laundering. And we are hoping that she is sentenced to at least ten years.

    She has a done a lot of damage to the investors. One a military captain, two couples who are retired and one who was saving for retirement because he is 57 years old and one a young man who just was starting to do well in his career. She caused a lot of emotional as well as monetary damage to these people . And has not paid one dime in restitution. So here is to praying she gets a very long sentence

  2. I keep reading about people like this being indicted, pleading guilty. I rarely read about what happened next, about the convictions. Would be very satisfying to know. Well, maybe not. Maybe I’d disagree with the sentence.

    Anyway, for the 2 who plead guilty, how many got away and will get away forever?

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