JNS BLOG EXCLUSIVE: T.J. Waconia Fraudsters, Where Are They Now?

Photo By Alex Hoff, age 11 

Shortly after the sentencing of T.J. Waconia fraudsters Thomas Balko and Jon Helgason, I had a very interesting lunch meeting with Jim Watkins, the self-described "best friend" of Balko.

Jim and I have been so far apart on our views of what is "justice" in this case, and so many words have flown back and forth, that for a while I dubbed Jim "the Anti-Johnny." Jim took that label and wore it with pride.

So, I ask you, if Johnny Northside is made of "Johnny matter," and the evil Anti-Johnny is made of "anti-Johnny matter," what happens if they touch? It was my contention the whole universe would be destroyed, but I learned all I know about anti-matter from watching "Land of the Lost" on Saturday morning.

Kip Browne, Chair of the Jordan Area Community Council, no doubt speaking in his capacity as chair, and as a licensed attorney, informs me the "only thing" which will happen if matter and anti-matter touch is a "wormhole" is created in the fabric of space and time. Watch out if you're in the second booth from the entryway at Broadway Pizza, that's all I'm going to say.

In any case, me and Jim Watkins met to bury various hatchets and discuss the T.J. Waconia matter...

My son, Alex, was sitting in the booth at Broadway Pizza, playing on my computer. I told my son about Jim--how we really don't agree on some stuff, and there was the possibility the discussion could get angry, but most likely we'd just have to "agree to disagree." I told my son grownups with good sense could sit down and talk like this. He could learn a thing or two by being in a position to observe such a conversation, with his mouth mostly shut.

After I explained this stuff, my son was actually worried some wrath might come in HIS direction from Jim's mouth. I told my son THAT just wouldn't happen, because there had been internet discussions where I'd said "LEAVE THE KIDS OUT OF THIS, CHILDREN ARE INNOCENT," briefly taking the side of Helgason and Balko where THAT was concerned. The constitution of the United States specifically forbids "blood crimes," which means you're not guilty of anything just because your PARENT is guilty.

No, I told my son, Jim wouldn't say anything mean...at least not to an 11-year-old.

To his credit, Jim was as pleasant as could be. We've figured out a long time ago that he's not going to change my mind, and I'm not going to change his. Jim gave me copies of the self-published books he's written about making money in real estate--the advice is limited to the State of Texas--and I signed Jim's copy of Dumpster Diving: The Advanced Course by John Hoffman.

In the course of our conversation, Jim told me some stuff about Thomas Balko and Jon Helgason. First of all, they are planning to show up and serve their sentences. They've each calculated how old they'd be after 84 and 96 months, respectively, and they've figured out much of their life will be ahead of them. So they're not going to throw all that away by getting in a car and driving to who-knows-where.

Prior to meeting with Jim, my son and I had a long talk about extradition treaties and the best place to go if you're a fugitive. My son figured he'd go to ENGLAND, because he can speak English and so it would easier to make a life there.

I told my son about Brazil, and how as long as you're the father of a Brazilian child, THEY WON'T EXTRADITE YOU. I was just getting to the part about how the best way to avoid these issues is to simply obey the law in the first place, but Jim showed up right at that moment and sat down, ordering cheese bread, and I forgot to tell Alex to remain law-abiding, even if he might happen to learn a thing or two about loopholes in extradition treaties.

If my son becomes a fugitive living in Brazil, desperately seeking to father a child, it will all be the fault of Jim Watkins.

Anyway, Jim mentioned that Thomas Balko has been working. Jim said something about involvement in the roofing industry. How the mighty have fallen!

However, I wasn't taking notes, and I confess it may have been HELGASON who Jim was talking about, but I was fairly confident the guy selling roofing supplies was BALKO. Use comments function if you know different. If it was HELGASON selling the roofing supplies, I still draw the same conclusion:

How the mighty have fallen!

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North Minneapolis Mortgage Fraudsters--Collect The Whole Trading Card Set!

Photo By Anonymous Source

Anybody who needs pictures of the aftermath of the T.J. Waconia sentencing hearing is welcome to use these photos from Flickr.com, with appropriate photo credit. To access the photos, just...

...pull 'em off my account, click here.

Everybody knows I'm pretty cool about sharing my pictures, just credit John Hoff and no need to even contact me to ask. HOWEVER, advertising entities, historians or mainstream media who want to use the pictures should contact me to pay some nominal, highly-affordable sum. Thanks.

In this case, though, I'd have to kick it back to my anonymous source, since I didn't take the pictures. (Good heavens, I'd be scared of the U.S. Marshalls, who were being pretty hardcore that morning...don't even get me started)

Oh, by the way...can anybody confirm the identities of the guy in the blue suit versus the one in the tan suit?

Yes, I have pictures of both but I am trying to confirm which one is Balko, which one is Helgason. This is what happens when the mainstream media let these guys flounder in the court system for a year or so, and can't even publish a mug shot!

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Neighborhood Housing Director Urges Adequate Funding To Put Mortgage Fraudsters "Heads On A Pole"

Contributed Photo, One Of The Convicted
T.J. Waconia Fraudsters

Responding to my recent posts about the Larry Maxwell mortgage fraud trial, Hawthorne Housing Director Jeff Skrenes emailed a thoughtful response about the need for adequate funding to prosecute complex, highly-involved mortgage fraud schemes, especially in the hard hit area of North Minneapolis.

I knew Jeff The Mortgage Geek would have some great thoughts on this subject. Jeff says as follows...

It's interesting that as you blog about the Larry Maxwell trial, you also mention the David vs. Goliath nature of who has funding to do certain things.

Just before coming to Hawthorne, I met a victim of Maxwell's fraudulent tactics. I was working for ACORN at the time, organizing to get the predatory lending legislation passed. (THAT was a funding disparity in and of itself, mind you. Industry lobbyists reportedly got paid six figures just to come to MN for a few months to fight the bill. The only way you could say I got paid six figures is if you counted the two numbers AFTER the decimal point.)

And just before THAT, I was a loan originator with Centennial Mortgage and Funding.

In January of 2007, right before I left the industry, Centennial loan originators were trained in on how to spot what was called a "One-Transaction Flip." I don't know if this is now a commonly used term, but it was what Maxwell is accused of doing, and it is a type of transaction that is virtually impossible to do without violating the trust one has as a licensed real estate professional AND breaking laws in the process.

(JNS says: well, I certainly hope for Larry Maxwell's sake that he's gone to the effort of getting trademark protection) (Broken sarcasm font notification)

So I got the training to spot this incredibly complex, very profitable type of fraud. Then I left the industry and organized within communities affected by this fraud, and found someone who was a victim (and potentially participated in several such transactions with Maxwell).

With the help of a realtor, I looked on the MLS and saw that Maxwell was doing this over and over again. Just based on the volume of his transactions, we (this realtor and I) figured he had to be raking in at least $80,000 a month. And then earlier this year, thanks to your blog, I saw some of the court documents showing that he earned as much as 14.6% in realtor commissions - more than double the typical fare.

(JNS says: Oh, yeah, that would have just...um...jumped right out at me, too)

Obviously we don't know how much of that he had to share with his buddies- - loan officers, appraisers, title companies, buyers who got a cut, and shady "consultants" who referred either people or stolen identities to the Maxwell's. Even so, the amount of money flowing from these transactions was CONSIDERABLE. Large enough that one could perhaps save up $50,000 in mattress money in case one needed to post bail, certainly.

(JNS says: well, that whole thing about $50,000 stuffed in a teddy bear is...um...Hunter S. Thompson parody writing)

Imagine my surprise when I found out that this guy lived in the very neighborhood where I was hired as Housing Director. I had the technical know-how to understand what he was doing, he was right in front of me, and I knew enough realtors and others in the industry that could have kept a close eye on him in various ways.

Metaphorically, I had a target, I had plenty of ammunition, but I had no gun to fire it with. Why?

Well, there was a task force (I think it was in Hennepin County, but it could have been statewide) set up to deal with mortgage fraud. Right around that time, it had been shut down or its funding greatly reduced. The reasoning I seem to remember is that the cases were incredibly complex and required a lot of time and money, and didn't have enough of a guaranteed "return" (i.e. conviction) to make pursuing such cases worthwhile.

(JNS asks: I hope any readers who have specific information will comment and help nail down more details about when this task force was operating, when and why it was shut down, etc.)

That left reporting him (Maxwell) to the Commerce Department (run by Pawlenty appointees who really don't like to regulate things like, oh, COMMERCE) or the Attorney General's office.

I could have done more to refer things there, I suppose. I also brought up this case to an investigator, I think with the Minneapolis or Bloomington PD, at a Hawthorne Huddle when I had just started working as Hawthorne Housing Director. But I was still getting the lay of the land and was very new to the neighborhood. I didn't have the experience or clout to make this a huge priority when I had so much else to learn about my job and the neighborhood. It bothered me no end to know that there was mortgage fraud going on in my neighborhood and I didn't know how to stop it.

Yes, the FBI raided Maxwell eventually, but how many bad deals did he do before that happened? How many people were victimized? What was the continued damage to the community? How much more money did he rake in to pay top-shelf defense attorneys before things finally caught up with him?

And how many more Larry Maxwells are still out there, looking for the next way to scam people out of their money?

If we had the proper funding for mortgage fraud investigation, we could hold the fraudsters accountable, we could track them down before they take advantage of even more people with their next scheme, and we could send a message that in Minneapolis, in Hennepin County, in Minnesota, you do not come here and break the law.

If we don't get funding to get tough on mortgage fraud, then our other option is to get together and sing the opening line to "Everybody Knows" by Leonard Cohen. "Everybody knows the dice are loaded, everybody rolls with their fingers crossed. Everybody knows the war is over, everybody knows the good guys lost. Everybody knows the fight was fixed, the poor stay poor and the rich get rich. That's how it goes, and everybody knows."

In my more cyncial moments, I like that song, but I'd much rather put the figurative heads of fraudsters on a pole.

(JNS says: yeah, and while I'm at it, I'd like to wear their bloody metaphorical ears for a necklace)

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JNS BLOG EXCLUSIVE: Images Of The Teary Aftermath Of The TJ Waconia Mortgage Fraud Sentencing

Photos By Anonymous Contributor

An individual who was at the sentencing hearing for the T.J. Waconia fraudsters--Thomas Balko and Jon Helgason--snapped some photos outside the courtroom with a cell phone camera.

No image of Thomas Balko and Jon Helgason has, to my knowledge, been published in the media to date. Yesterday the Star Tribune made a valiant effort to get a photo, but failed. Where the STrib falls short...

Johnny Northside blog and my network of helpful readers/contributors comes through.

It should be noted, here: the prosecutor said these are not "evil" men, and they have friends and supporters who love them. Nobody wins, here, but maybe North Minneapolis gets a little better instead of a little worse when there are consequences for fraudulent real estate schemes.

Also, just to be clear: I DID NOT TAKE THESE PICTURES. In fact, I was forwarded a very nice image of MYSELF taken with the same cell phone camera, good enough to use for online dating, in fact.

Thanks, oh-so-anonymous contributor, you know who you are and I appreciate your help!

(Note: help needed to confirm the identity of which individual is Balko, which one is Helgason)

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Larry Maxwell Mortgage Fraud Trial: Defense Rests, Fake "J.F." Finally Revealed: Jerome L. Kingrussell

Photo By Council Member Don

Samuels, 1564 Hillside Ave. N.

Defense rested today in the seemingly-endless trial of Larry Maxwell. Outside the hearing of the jury, in arguments made for a mistrial or a directed verdict of innocence, defense attorney Larry Reed argued numerous...

...technicalities as grounds, including inability to make a record of the trial because he was told to put objections in writing after being found in contempt of court and fined $100.

In the course of this argument, the identity of the fake "J.F." was revealed, not as Kenny or Kenneth Wilson--a name which had SEEMED to come from the lips of defense attorney Larry Reed--but somebody named "Kingrussel."

Though it initially seemed "Kingrussel" was two names ("King Russel") subsequent bloggy sniffing around in courthouse corners revealed the name of the (alleged) imposter to be "Jerome L. Kingrussel." (Unknown if "Kingrussel" has one "l" on the end, or two)

In light of this information--which is believed to be of much better quality info than previous info--the post naming "Kenny Wilson" as the possible "J.F." imposter has been immediately appended and corrected. What came from the lips of Larry Reed in his "Minnesota adjusted Southern drawl" (as one local lawyer put it) was apparently "Kingrussel an..." not "Kenny Wilson."

Sorry. I do the best I can. Nobody else is here doing it, and it needs to get done.

The final witness for the defense today was Larry Fitzgerald, who is a sportscaster associated with Larry Fitzgerald Dot Com and the father of Larry Fitzgerald, Jr., who plays...I don't know, some kind of sporto...STUFF. I guess people who are into that kind of thing think he's a big deal. WHATEVER.

Larry Fitzgerald's appearance on the stand led prosecutor Liz Johnston to remark there were "a lot of Larrys running around" including Larry Maxwell, Larry Reed, and now two Larrys both named "Larry Fitzgerald." To make matters even more confusing, Larry Reed called a Joe Reed to the stand as a defense witness, but said Joe was no relation.

(Though Larry Reed was also heard to tell prosecutors Joe Reed was his uncle, in what was apparently just a joke. Or not)

Larry Fitzgerald spoke of a couple of years of support that Larry Maxwell had provided by the purchase of advertising on the sports network, and how Maxwell had been helpful in trying to locate a property for Larry Fitzgerald, Jr., which the younger Fitzgerald had subsequently decided not to buy. (The older Fitzgerald remarked young people just constantly change their minds about stuff, even on a daily basis)

In a surprising twist, a man named Marlon Pratt was seen in court today as an intensely-interested spectator. Pratt is messed up in the Universal Mortgage fraud allegedly perpetrated by Donald Walthall, and has apparently retained Larry Reed as his defense attorney. Marlon Pratt had no comment to make to me and, indeed, was not interested in offering his name, but I was able to determine his identity by other means. It is unknown at this time whether there is any connection between the Universal Mortgage fraud ring and Larry Maxwell, other than Larry Reed being the (apparent) defense attorney for both.

Though told to come back at 1:45 p.m., the jury was subsequently notified there would be no more proceedings for the rest of the day, arrive by 8:45 a.m. tomorrow, April 17. Word was the defense managed to obtain additional time to review some documents which may be offered into evidence by the prosecution.

An editorial commenty as follows: all indications are this Maxwell case is the ugly-sticky-heavy lid of something very big, and furthermore that mortgage fraud infects North Minneapolis in a ubiquitous way; rather like the club drug ecstasy infects the techno rave music scene. But consider the T.J. Waconia case by way of comparison.

In that matter, the City of Minneapolis managed to gain a significant degree of control and/or influence over the fate of some 160 properties, some of which appear on their way to being rehabbed for the betterment of the neighborhood.

Getting to the bottom of all this endless black hole of mortgage fraud may a viable and valuable tactic for Minneapolis to get a handle on the numerous vacant, foreclosed properties already in North Minneapolis...with more possibly heading our way in the foreclosure pipeline. To accomplish this, the prosecutor's office must--MUST MUST MUST--have adequate resources to pursue these cases. I call upon the state, the federal government, the cities and the neighborhoods to give the prosecution what it needs to root out the virus which infects and undermines the very foundations of our civilization: the goal of stable, high-quality home ownership to live, love and raise one's family.

Prosecutors Brad Johnson and Liz Johnston are literally wearing out their shoe leather, putting in the kind of overtime hours one expects of COMBAT TROOPS instead of lawyers. In a casual inquiry by Judge Chu today as to whether Brad Johnson had been able to take some time off and be with his family in the last few days, including a new baby, Johnson revealed he had, instead, been forced to work on this case rather than spend some quality time with his family.

True, mortgage fraud isn't as enthralling as murder. But if we let these criminals get away with stealing millions of dollars just because the cases are highly technical and incredibly tedious, these con artists will cook up new scams that will hurt our society in ways nobody can predict.

None of my reporting or commentary is an effort to slight the work of defense attorney Larry Reed, who seldom lets an opportunity escape to argue technicalities, and who probably shouts "objection" upon waking up each morning. (That last sentence was a humorous commentary) Much of Reed's life and personal honor appears tied up in this case, for reasons that aren't always apparent. Does Reed ALWAYS fight this hard? Indeed, he fights for Maxwell as though this man were his own brother, friend and business partner all wrapped into one. It doesn't MATTER how long it takes. Somehow, Reed will buy Maxwell one more day, one more hour, one more frail thin straw of hope even if he risks his legal career in the effort.

When Maxwell goes down--and I predict he will indeed go down hard--Reed will be swinging, as a good defense attorney should. A guilty-as-sin mortgage fraudster could hardly do better than to hire Larry Reed.

I swear, I really need to get more advertisers. Thank you, Larry Reed, for the five bucks cash money and half a container of cole slaw. Now, can we talk about getting a cut of that $50,000 emergency bail money you reportedly have wadded up in your teddy bear?

(Those last two sentences were just outrageous and pithy commentary in tribute to the gonzo journalism style of Hunter S. Thompson, NOT to be taken seriously)

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JNS BREAKING NEWS EXCLUSIVE: TJ Waconia Fraudsters Sentenced

Stock photo by John Hoff

Jon Helgason and Thomas Balko, the duo behind the infamous T.J. Waconia mortgage fraud scheme that hit North Minneapolis hard in the wake of the foreclosure crisis, were sentenced to prison today by Judge Joan Erickson at the federal courthouse in Minneapolis.

Thomas Balko received...

...a sentence of 84 months. Helgason received a stiffer sentence of 96 months, reflective of the fact Helgason had "abused a position of trust." Both men received 3 years supervised probation after prison, and numerous conditions including restitution. A restitution hearing will be held later, separately.

The men remain free prior to a "surrender date" 6 weeks from now, but must go to prison on Thursday, May 28. The judge recommended Balko serve his sentence in Duluth, to be near his family, but the recommendation is not binding on the prison authorities. Any report of problems will cause the duo to immediately go into custody.

Balko and Helgason have 10 days to file a notice of appeal. In a conversation held afterward outside the courtroom, amid a large throng of tearful supporters for the defendant, Balko's attorney urged filing a notice of appeal, saying, "If we don't file a notice of appeal...they win."

In what seemed a deliberate effort to avoid media--consisting only of Steve Brandt from the Star Tribune, a female photographer, and this blogger with his el cheapo digital "gangster cam"--Balko and Helgason managed to successfully exit the courthouse without having their pictures taken, though it is believed pictures exist taken by an individual with a cell phone camera. I'm making an effort to obtain those pictures, but more details will follow in any case.

And, in a side note, once again the blogosphere EATS THE LUNCH of the mainstream media. Uh huh! That's right!!!! 

Now off to the Larry Maxwell hearing...

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