A jury has found a Wayzata couple guilty of funneling hundreds of thousands of dollars from an Orono office development project that was never completed.
After five hours of deliberation, a Hennepin County District Court jury on Wednesday found both Virginia Carlson, 62, and her husband Philip, 58, guilty of five counts of theft by swindle, the Hennepin County Attorney's Office says.
Prosecutors plan to seek four years in prison for the couple; a sentencing hearing was set for Oct. 30.
The couple stole money through a company they owned that did not do work for the project and failed to pay companies that were doing work, Hennepin County Attorney Mike Freeman said. The two used the cash to buy pricey cars, snowmobiles and maintain two homes, he said.
Freeman said the theft also played a role in the demise of First Commercial Bank of Bloomington, which federal regulators shut down in 2012 and sold to a Kentucky-based bank holding company.
The Carlsons were acting as developers and general contractors of the Amber Woods commercial office building development, with room for about 10 businesses at 2060 Wayzata Blvd. W. in Orono.
Work began on the project in 2007, which is when the swindle started, prosecutors said.
Several scams emerged, they said. Prosecutors say the couple obtained money from the bank to pay a legitimate subcontractor, Sundblad Construction, which was not paid. Prosecutors also say the couple obtained money from the bank to "pay" another subcontractor, Logan Ryan, which was in fact owned by the couple.
In the end, First Commercial Bank paid nearly half of $6.4 million it had agreed to loan the project, prosecutors said. The couple was charged in 2011 for the swindles that occurred from October 2007 through May of 2008, the year the project came to a halt. The unfinished project site is now listed for sale.