A husband and wife who were accused of stealing money from an Orono office development project that was never completed were each found guilty of five counts of theft by swindle, Hennepin County Attorney Mike Freeman announced Thursday.
Philip and Virginia Carlson, of Wayzata, were the developers and general contractors of the Amber Woods commercial office building development in Orono, according to Freeman's office.
Work began in 2007, and to help finance the project, First Commercial Bank agreed to loan $6.4 million. Roughly half of those funds were loaned out before the project came to a halt in 2008, the Hennepin County Attorney’s office said.
The Carlsons were accused of submitting false invoices on behalf of Sundblad Construction to access the loan money, which was supposed to be paid to subcontractors. Those invoices were allegedly in the hundreds of thousands of dollars.
“That scam was repeated several times,” according to Freeman’s office, and when subcontractors complained about not being paid, the bank told the Carlsons that the checks from the loan would be made out exclusively to the subcontractor, instead of to the Carlsons’ company.
So the couple “came up with a new scheme,” according to Assistant Hennepin County Attorney Emery Adoradio. They allegedly began submitting invoices for work performed by Logan Ryan—which, unbeknownst to the involved parties, was a company owned by the Carlsons. And Logan Ryan was not completing work on the project, according to prosecutors.
In other words, the Carlsons were accused of funneling money through a company that wasn’t doing work on the project, while failing to pay subcontractors that were. (Learn more about the allegations in this 2011 Star Tribune story about the charges, which noted that the Carlsons' development company was called Interspace.)
Funds swindled through the scheme helped the Carlsons buy “expensive cars, snowmobiles, and to keep up two homes,” according to Freeman.
The couple was accused of stealing over $35,000 between October 2007 and May 2008, and they were each charged with five counts of swindle in 2011. Freeman said that their scheme also “played a role in the demise of First Commercial Bank of Bloomington.”
Now, the Carlsons have been found guilty of those charges, and sentencing has been set for October 30, according to the Hennepin County Attorney’s office. Prosecutors said they will seek roughly four years in prison for the couple.