Fraudster Banned Forever from Mortgage Industry

Allison Tussey —  February 6, 2012 — Leave a comment

Michael Hudalla, Mendota Heights, Minnesota, was sentenced by a Hennepin County District Court Judge to 75 months in prison on two counts of racketeering in a major mortgage fraud case.

In addition, he must pay restitution of $396,986 to CitiMortgage and $477,037 to Provident Funding.  Hennepin County Judge George McGunnigle also ordered Hudalla to pay a $10,000 fine towards the cost of the investigation and the prosecution. He also is banned from ever working in the mortgage business.

Hudalla was the Chief Executive Officer and co-owner of Enzo Mortgage Group, St. Paul, Minnesota. Along with his co-defendant Nicole Origas, a real estate agent who did business as Alfa Investment Group and Alfa Real Estate Group, and other conspirators, Hudalla set up a sophisticated scheme.

Much of the scheme involved condominium units at 14937 60th St. N., Oak Park Heights, Minnesota, from April to October 2007. Employees at Enzo Mortgage wrote false mortgage loan applications, claimed large real estate commissions to Alfa at the closing, laundered those commissions through an Edina bank and then distributed the money as kickbacks to Hudalla and the other defendants. Sometimes those kickbacks were used as down payment funds to purchase the next property in the scheme.

Eventually, the condominiums would go into foreclosure. At least one of the buyers, who thought he was part of a legitimate investment for his retirement fund, had to file for bankruptcy.

Judge McGunnigle justified Hudalla‘s sentence by noting that all eight homes went into foreclosure, the crimes were highly sophisticated, the crimes harmed the entire community by artificially inflating home prices and then the foreclosures ruined housing prices. The crimes involved $2.2 million in fraudulently-obtained mortgages and Hudalla received $335,000 in kickbacks. Judge McGunnigle called the behavior “severe,” “grave” and “criminal.”

Origas also was sentenced and received 51 months in prison after pleading guilty to one count of racketeering. She was ordered to pay the same restitution to the same companies as Hudalla.

The sentencings wrap up the Enzo investigation. This was the second case charged by the Hennepin County Attorney’s Office against people associated with Enzo Mortgage. In the fall, Eric Bernard was sentenced to 87 months in prison, Stacy Harrold to 75 months and David Schoenhofer to 54 months for mortgage fraud and identity thefts. Those crimes took place in Hennepin County and that investigation revealed the Oak Park Heights scheme.

“This is another fitting sentence to another mortgage fraudster,” Hennepin County Attorney Mike Freeman said. “We remain diligent in completing our work against mortgage fraud.”

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Allison Tussey

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