Four years of silence: Beltrami County Commissioner Jim Heltzer challenges delay on real estate fraud concerns
A tip about illegal activity to former FBI Special Agent John Egelhof from a member of the real estate community in August 2004 and Beltrami County Assessor Duane Ebbighausen's report the next year to the Minnesota Department of Revenue about sus...
A tip about illegal activity to former FBI Special Agent John Egelhof from a member of the real estate community in August 2004 and Beltrami County Assessor Duane Ebbighausen's report the next year to the Minnesota Department of Revenue about suspected fraudulent real estate activity did not result in an investigation. But a complaint lodged in December by the daughter of a couple who believe they were victims of fraud spurred the FBI to investigate.
And County Commissioner Jim Heltzer wants to know why the delay.
One result of Egelhof's investigation was a Jan. 2 interview with Ebbighausen, who said he believes 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.
"Here we are from 2004 to 2008 trying to control our budget and our spending and still trying to provide a level of services to our people, and here are these guys allegedly scheming to make money by inflating the value of property beyond reason," Heltzer said Monday.
He said he will raise a number of questions during today's County Board meeting. One major question is why commissioners were not informed of the concerns raised by Ebbighausen, who reports to County Administrator Tony Murphy.
According to Egelhof's 33-page affidavit of application for a search warrant from U.S. Magistrate Janie Mayerson, dated March 24, "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, as well as individuals connected to Realtor Detwiler; Realty Executives and Trust Mortgage, owned by Matt Sparby; and Action Appraisal, owned by sisters Sandra Erpelding and Julie Townsend.
Egelhof described in his conclusion that there was a conspiracy among Detwiler, whose attorney maintains his client has done nothing wrong, along with appraisers, lenders and investors, to defraud buyers and sellers.
Detwiler did not return a call Saturday, and a recording Monday stated that his cell phone number was no longer in service.
One of Egelhof's examples of the alleged conspiracy is an agent working through Action Appraisal, the in-house appraisers for Sparby Financial Group and Realty Executives, who appraised a house in Hines for $217,000. The appraiser described the house as two-story (it is one-story), the lot as 80 acres (it is 40 acres) and gave the address as Bemidji "a much more favorable market" than Hines. The property sold in 2003 for $55,000.
Another of Egelhof's examples is a Calihan Avenue Northeast property in Bemidji. Matt Sparby bought it in 1997 for $34,000 and sold it to Detwiler for $35,000 in 2004. Detwiler sold it less than one year later for $160,000, according to the affidavit.
"This just infuriates me because I represent a poor district in a poor county," Heltzer said. "How much is the real estate fraud outlined in the affidavit a factor in rising real estate prices in our county? Is this the only (alleged) real estate conspiracy in the county?"
Heltzer said County Board members, because they did not know the fraud was suspected three or four years ago, were unwittingly made a part of the alleged conspiracy.
"The most important thing we do is set your taxes," Heltzer said. "We should, at least, be in control of the facts that relate to this."
As on Monday, no charges had been filed in U.S. District Court in Minneapolis.