Maple Grove Real Estate Appraiser Pleads Guilty to Fraud

A Maple Grove real estate appraiser pleaded guilty in connection to a $1.8 million fraud scheme.

Thirty-one-year-old Ryan Daryl Krutzig owned and operated US Appraisal Management in Maple Grove. In his plea agreement, he admitted to conspiring to commit mortgage fraud from March through June of 2006.

He admitted to purchasing a residential property but didn’t tell the mortgage lender that his company handled the appraisal. As part of the appraisal process, Krutzig prepared and approved the paperwork for the lender, acknowledging that he had no interest in the property.

On March 28, 2006, Krutzig and others bought a property on the 3600 block of Bryant Avenue North in Minneapolis. Krutzig again had his company handle the appraisal. The property was sold for $209,900 on June 29, 2006. Krutzig got a portion of the proceeds.

Afterward, the property went into foreclosure.

Thirty-two-year-old Jesse Scott Hoffman of St. Cloud pleaded guilty to wire fraud on Sept. 15, 2011. He was a real estate agent for Stellar Realty.

In Hoffman’s plea agreement, he admitted to conspiring with Thomas Hunter and Frederick Deen of Legacy Lending to get mortgage loan proceeds through fraud from November 2005 to December 2006.

Hoffman admitted to hiding payments from the process to straw buyers of various properties. The conspirators recruited the straw buyers to buy real estate with mortgage loans that were more expensive than the true values of the properties.

Krutzig is accused of inflating appraisals, while Hunter and Deen are accused of providing the fraudulent loan applications.

Hoffman got about $166,000 in commission payments on 14 false transactions. This totaled about $9 million in total loan proceeds. At least $900,000 of that money was paid to the co-conspirators.

Deen was sentenced to 24 months in prison in March 2010. Hunter was sentenced to 40 years in prison in September 2010.

Hoffman faces a maximum penalty of 20 years in prison. Krutzig faces a potential maximum of five years.