Former real estate agent Ed Detwiler pleads guilty to wire fraud conspiracy
BEMIDJI – A former Bemidji real estate agent faces up to 20 years in prison after pleading guilty in federal court to conspiracy to commit wire fraud in a scheme that defrauded more than $743,000 from mortgage lenders.
Ed Detwiler entered the plea Monday during a hearing before U.S. District Judge John R. Tunheim.
In his plea agreement, Detwiler admitted that admitted that between Jan. 19, 2007 and March 1, 2007, he devised a scheme to fraudulently obtain money, according to the United States Attorney’s Office.
After an inquiry by the Pioneer, prosecutors issued a statement via email, stating Detwiler purchased property in Florida financed by mortgage loans in which he received a secret refund from the sale price of approximately $194,600. He did not disclose the refund to the lender financing the transaction. Detwiler then wired the $194,600 from an account in Florida to an account in Minnesota on Jan. 26, 2007.
The prosecutors’ statement said Detwiler admitted he engaged in a scheme to defraud mortgage lenders and conceal information from them regarding the sale and financing of property in and around Bemidji. The scheme included the payment of undisclosed kickbacks to property buyers, as well as the undisclosed paying and subsidizing of buyers’ down payments. The total loss resulting from Detwiler’s scheme was $743,698.70.
A sentencing hearing has not been set, but Detwiler faces up to 20 years in prison, as well as possible fines and forfeitures.
Once federal officials complete a background check, a sentencing hearing will be scheduled, likely in six to eight weeks, Marsh Halberg, the attorney for Detwiler, said Tuesday.
“I’ll be asking for leniency” on Detwiler’s behalf since the Bemidji man doesn’t have a criminal background, Halberg said.
Typically in a conspiracy case, there are multiple defendants, but Halberg said “no one else has been charged that I know of.”
The plea agreement in the case calls for Detwiler to cooperate with law enforcement in the investigation and prosecution of other suspects.
Detwiler, whose landline is no longer in service, could not be reached for comment.
Brandon Belich, who works for the criminal investigations division of the Internal Revenue Service, and Vicki Petricka, a spokeswoman for the federal agency, both declined comment on the case.
In March 2008, the FBI executed a search warrant at Realty Executives, leading to an affidavit accusing Detwiler and his associates of real estate fraud. The affidavit, prepared by former FBI agent Jon Egelhof, spelled out a conspiracy to inflate property values through sham sales, kickbacks and falsified loan applications.
According to Pioneer archives, Egelhof received a tip in 2004 about illegal activity and Beltrami County Assessor Duane Ebbighausen’s report the following year to the Minnesota Department of Revenue about suspected fraudulent real estate activity did not result in an investigation.
A complaint lodged in 2007 by the daughter of a couple who believe they were victims of fraud spurred the FBI to investigate.
One result of Egelhof’s investigation was an interview with Ebbighausen, who said he believed properties were being bought and sold quickly, “flipping,” to boost appraisals, and as a consequence, inflated property valuations and increased assessments for tax purposes. He told Egelhof he had noticed the trend in 2005 and reported it to the Department of Revenue.
According to Egelhof’s 33-page affidavit for a search warrant, “The properties appear to have been sold repeatedly among a group of friends and associates of Ed Detwiler.” Egelhof then listed 157 properties whose sales are suspect and individuals.
Egelhof described in his conclusion that there was a conspiracy among Detwiler, along with appraisers, lenders and investors, to defraud buyers and sellers.
On Tuesday, Ebbighausen said Detwiler’s guilty plea validates suspicions of fraudulent sales at the time and he hopes it brings closure to the victims.
“We’re glad that (plea) happened,” he said. “It shows it wasn’t getting swept under the rug.”