Rosemount Man Sentenced in TJ Waconia Mortgage Fraud Scheme

A 34-year-old Rosemount man was sentenced Monday for the role he played in a mortgage fraud scheme involving about 200 properties and $35 million. 

Nathan Daniel Jesh was sentenced to three years of probation on one count of conspiracy to commit mail and wire fraud, according to a news release from the United States Dept. of Justice/United States Attorney's Office, District of Minnesota.

"Jesh, who was indicted along with two co-defendants on June 15, 2010, pleaded guilty on November 30, 2010. All three defendants will be required to pay more than $1.8 million in restitution," the news release said. 

In his plea agreement, Jesh admitted to knowingly closing at least 175 real estate transactions that had fraudulent loan applications as well as knowing the seller was providing the investor with funds to pay the purchase price.

The scam was completed by agents of TJ Waconia, a former Roseville real estate company. 

According to the news release, "The owners of TJ Waconia and its affiliated entities (“TJ Group”), Jon Helgason andThomas Balko, were sentenced in 2009 for operating the scheme. On April 20, 2009, Helgason was sentenced to 96 months in prison, and Balko was sentenced to 84 months.

"The owners purchased approximately 200 properties throughout the Twin Cities metropolitan area, principally in north Minneapolis. They would then resell the property within a few weeks to an “investor” who would purchase the property, sight unseen, at a price set by the owners without negotiation, often times $20,000 to $60,000 more than the TJ Group had paid."

Apparently, the owners would tell the investors they were simply 'lending' their credit to TJ Waconia, and in exchange for lending that credit, the investors would receive a kickback payment of about $2,500 and a promise of an additional payment after two years when the TJ Group was to repurchase the property from the investor, according to the release.

Through the scam, lenders were led to beleive that the investors were the actual owners of the properties. However, the investors' ownership was in name only. 

During the two-year time period in which the investor owned the property, the TJ Group was responsible for all payments and maintenance on the properties.

According to the news release, "The owners also provided investors with funds to pay the buyer’s portion of the property purchase price and worked with others to provide lenders with false loan applications on behalf of the investors so that they would qualify for the loan. The owners, on behalf of the investors, obtained approximately $35 million in mortgage proceeds to purchase the properties from the TJ Group.

"Ultimately, the scheme collapsed, and the TJ Group did not repurchase the properties or continue making payments to the investors inorder to pay their mortgages. The investors were left owning properties with mortgages thatexceeded their property’s market value."