Andover, MN Man Sentenced for Mortgage Fraud

Eric Krahnke, age 52, was sentenced on February 5th to thirty seven months in federal prison for his role in a real estate fraud scheme.

Mr. Krahnke was a loan officer for Associated Bank side stepped Associated Bank’s loan approval channels to obtain twenty one real estate loans totaling over four million dollars. The loans were obtained between March of 2003 and October of 2003 according the United States Attorney’s Office of Minneapolis.

Mr. Krahnke issued the loans to Michael Striker. Michael Striker for his role was sentenced on February 3rd by United States District Court Judge Joan Erickson to forty-one months in federal prison for his role in the fraud scheme.

Mr. Krahnke and Mr. Striker pleaded guilty back in August of 2008 to one count of bank fraud and one count of money laundering after being indicted in federal court.

Mr. Krahnke approved twenty-one loans for either Mr. Striker directly or for his company, United States Equities of Minnesota. Mr. Striker obtained over seven hundred twenty four thousand dollars in loan proceeds from the twenty-one loans. Mr. Krahnke for his part received a commission from Associated Bank for originating the loans and three percent of the loan proceeds on each loan for approximately one hundred thousand dollars.

The transactions for Mr. Krahnke were listed on HUD-1 settlement statements as broker fees and were paid to Worldwide Mortgage. Worldwide Mortgage was owned by Mr. Krahnke and the company itself did not originate any loans.

Associate Bank was not aware that Mr. Krahnke was receiving broker fees or had any ownership in Worldwide Mortgage. The relationship would have been a conflict of interest and Mr. Krahnke know this and therefore didn’t disclosure the information to Associate Bank.

Mr. Striker told investigators that the loans were for construction rehabilitation projects and that he used some of the proceeds for unrelated expenses and debts. Some of the rehabilitation projects were actually properties in which financial distressed families still lived in.

Mr. Krahnke in his plea agreement stated that on October 24, 2003 he conducted a wire transfer of over seventeen thousand dollars from his Worldwide Mortgage account to his personal bank account with Central Bank. Mr. Krahnke then issued a check from the United States Equities account on September 3rd, 2003 for thirteen thousand to Bremer Bank for River Run Properties. Mr. Krahnke and Mr. Striker both admitted that they were aware that the funds were derived from criminal activity.

The case was investigated by the Internal Revenue Service – Criminal Investigations Unit and The Federal Bureau of Investigation. The case by prosecuted by United States Attorney’s William Otteson and John Docherty.