This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Staff writer

A United States District Court Judge sentenced a 52-year-old Andover man Friday (Feb. 5) to 37 months in prison for his role in orchestrating a residential real estate loan scam.

Eric Krahnke, a loan officer at Associated Bank, bypassed normal loan-approval channels to get 21 real estate loans totalling more than $4 million between March 2003 and October 2003, according to the United States Attorney’s Office in Minneapolis.

The real estate loans were given to Michael Striker, 56, of Minnetonka. Judge Joan Ericksen sentenced Striker Feb. 3 to 41 months in prison.

Krahnke and Striker pled guilty in August 2009 to one count of bank fraud and one count of money laundering. They had been indicted in federal court in August 2008.

The two men described what their scheme was to the United States Attorney’s Office

The 21 loans were approved either directly for Striker or his real estate company called U.S. Equities of Minnesota. Striker received in excess of $724,000 in net loan proceeds at real estate closings for the 21 loans. Krahnke got commission pay from Associated Bank for originating the loans.

Striker also gave Krahnke 3 percent of the net proceeds of each loan, which totalled over $100,000.

These transactions were labeled as “broker fees” in the loan documents and paid through Worldwide Mortgage, which was a mortgage brokerage company that Krahnke owned. Worldwide Mortgage did not broker any of the loans.

Krahnke did not advise Associated Bank that he was receiving these “broker fees” and had an ownership interest in Worldwide Mortgage, which would have been a conflict of interest given his position as a loan officer, according to the United States Attorney’s Office.

Striker said the loans were for construction rehab projects, he used some proceeds for unrelated expenses and debts. Some alleged rehab projects were actually homes in which financially distressed families still resided.

Krahnke also admitted that on Oct. 24, 2003, he executed a telephone transfer of $17,943 from a Worldwide Mortgage account at Central Bank to a personal account at the same bank. Striker said on Sept. 3, 2003 he issued a check in the amount of $13,000 from a U.S. Equities account at Bremer Bank “River Run Properties.” The defendants admitted they knew the funds subject to those transactions were criminally derived.

“These schemes need to be exposed to stop the cascading negative affect this type of fraud has on our economy and the innocent parties involved,” said Julio LaRosa, special agent in charge of the St. Paul field office of the Internal Revenue Service (IRS) Criminal Investigation Division (CID).

“These sentences send the message that mortgage industry fraudsters will not go unpunished,” LaRosa said in a written statement presented after the Krahnke sentencing.

This case was investigated by the IRS’ CID and the Federal Bureau of Investigation. It was prosecuted by U.S. Attorneys William Otteson and John Docherty.



Eric Hagen is at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it