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Son of man who closed AL golf course pleads guilty to defrauding lenders


ST. PAUL — A 27-year-old Webster man pleaded guilty Monday in U.S. District Court to bilking more than $7 million from at least 15 mortgage companies between 2005 and 2008.

Dustin LaFavre pleaded guilty to a single count of conspiracy to commit mail and wire fraud in connection with the crime. He is the son of Scott LaFavre, a commercial real estate broker who in April 2006 purchased the Albert Lea Golf Club for $1.07 million and in May 2006 shut it down.

In his plea agreement, Dustin LaFavre admitted working with a real estate broker, known only as "Individual 1," to defraud the mortgage lenders. He and the broker recruited real estate buyers by promising they would receive large sums of cash from the proceeds of their mortgage loans.

The unnamed broker then helped LaFavre negotiate property values to inflate the price of the real estate. Mortgage lenders approved loans based on the inflated sales prices, and LaFavre, the broker and the buyers would split the difference between the inflated prices and the actual sales prices after the mortgage closings.

LaFavre also helped buyers qualify for mortgage loans by creating false verification of employment, depositing money into their bank accounts to make their balances appear higher and by providing them with down payments.

LaFavre also worked with mortgage brokers and loan officers willing to submit false paperwork.

LaFavre and the broker he worked with sold at least 172 properties during the course of their scheme, according to the U.S. attorney's Office. He now faces up to 20 years in prison.

U.S. District Judge Richard Kyle later will determine LaFavre's sentence.

The FBI and the U.S. Postal Inspection Service investigated the case.

Scott LaFavre intended to build a high-end residential area named Eagle's Rest on the site of the golf course he closed, with the stated plans to have son Dustin LaFavre be a major part of the operations. The son never seemed to be a part of Eagle's Rest in spite of the initial announcement. By December 2008, the father's company filed bankruptcy, leaving the vacant land in the hands of a local bank.