Suspended North Miami Mayor Tondreau found guilty of mortgage fraud

In May, North Miami Mayor Lucy Tondreau talks with the media outside the federal courthouse in Miami. She was found guilty of mortgage fraud on Tuesday.
In May, North Miami Mayor Lucy Tondreau talks with the media outside the federal courthouse in Miami. She was found guilty of mortgage fraud on Tuesday. MIAMI HERALD STAFF

With her familiar smile and charm, Lucie Tondreau broke through the rigid ranks of North Miami politics to become the city’s first Haitian-American female mayor.

On Tuesday, she was knocked off her pedestal as a Miami federal jury convicted Tondreau of using her popularity as a Haitian-American community leader to lure “straw buyers” into a multimillion-dollar mortgage fraud scheme during the past real estate boom.

The 12-person jury, which deliberated for only two hours, convicted Tondreau of conspiracy and wire-fraud charges after a two-week trial. The 55-year-old Tondreau, who was suspended from office in May after her election as mayor in 2013, now faces up to 30 years in prison at her sentencing March 20.

U.S. District Judge Robert Scola refused to grant a request by her defense attorney, Ben Kuehne, to let her remain free on bond while awaiting sentencing. Scola said she used her “celebrity” and “hoodwinked” buyers into allowing their names to be placed on bogus loan applications in exchange for kickbacks in a “massive” fraud against eight lenders, including major banks such as Wachovia.

The judge, noting the fraud was committed before Tondreau was elected mayor, said she was no different than any other convicted defendant and ordered her to surrender to U.S. Marshals in the courtroom while about 50 supporters watched in silence.

“I’m going to treat her like somebody who is what she is — a common criminal,” Scola said.

Kuehne, who represented Tondreau along with attorney Michael Davis, said the jury’s verdict “is as disappointing as it is unexpected.”

Tondreau stood trial in Miami federal court since early December on charges of conspiring to commit wire fraud with her ex-business partner and fiancé, Karl Oreste, and two other defendants, who are fugitives. She was accused of plotting with Oreste to bamboozle banks into loaning them a total of $11 million between 2005 and 2008.

The prosecution decided not to call the trial’s potential star witness, Oreste, 57, who pleaded guilty in July and was expected to detail the 20 crooked real estate loan deals that he and Tondreau were accused of putting together.

Prosecutors Lois Foster-Steers and Gera Peoples did not say why. But they may have had concerns about Oreste’s potential vulnerability on cross-examination. Tondreau’s defense team had planned to portray him as the consummate con man who duped her into playing an unwitting supporting role to fleece the banks. Without Oreste’s cross-examination testimony, however, there was little to no evidence of Tondreau’s claimed “victimization” for the jury to consider.

After the jury’s guilty verdict on conspiracy and four wire-fraud counts, Tondreau’s defense attorneys still stuck to their original theory.

“For a community conscience who has lived her life to serve the people, she was victimized by the fraud operation of a man she thought was both an honest businessman and her honorable fiancé,” Tondreau’s lawyers said in a statement. “She now knows the truth, and counts herself as yet another target of his fraud and deception. Lucie Tondreau asks the community to keep her in their prayers at this difficult time.”

U.S. Attorney Wifredo Ferrer, however, said Tondreau was anything but a victim, saying she “abused her prominence in the community to perpetrate” mortgage fraud “fueled by greed.”

North Miami Councilman Philippe Bien-Aime, who became acting mayor after replacing the suspended Tondreau, said he wouldn’t question the system but asked the community to pray for the former mayor’s family.

“As a former colleague that’s not what I wish for her, but there’s nothing we can do,” Bien-Aime said. “The system found her guilty and that’s the law of the land.”

Councilman Scott Galvin, who said Tondreau’s chances of beating her case were “bleak” after Oreste took the plea deal this summer, said he’s glad to see the city move on from another scandal.

“Obviously what happened took place before she was in office, but now the community sees her for who she was and what she did,” Galvin said. “Even someone who’s popular can be up to no good.”

The federal jury apparently found the evidence against her overwhelming, thanks to a string of straw buyers who testified over the past two weeks.

Yvon Exius was among the more compelling witnesses. Like many Haitian-Americans in North Miami, he got to know Tondreau through her immigration work, political activism and radio shows.

Above all else, the garbage collector says, he “trusted” her.

So when Tondreau asked him to be the buyer for a couple of high-priced homes during the last real estate boom, Exius agreed to do it, even though he couldn't dream of affording them. He says that she, in turn, gave him $10,000 for each deal.

The fallout: “It has ruined not just my credit, but my life,” Exius testified last Thursday.

At trial, Exius and seven other straw buyers testified that Tondreau talked them into buying homes without putting any money down. They only needed to sign the loan paperwork, and each received thousands of dollars in exchange. Normally, Tondreau would list the loan applicants as employees of her immigration business, Tondreau & Associates.

In Exius’ case, he purchased two homes in June of 2006: the first for $510,000 on Frow Avenue in the Coconut Grove section of Miami, and the second for $1.2million on Coronado Drive in North Miami.

In both instances, the loan paperwork showed that he had a monthly income of $29,215, that his employer was Right Choice Housing and that he paid some of the costs at the closings. None of that information was true, he testified, yet somehow, in a fast-and-loose real estate market soon to go bust, he qualified for two massive mortgages.

During closing arguments, Tondreau’s attorney, Kuehne, said Exius should have directed his anger at Oreste, not her, arguing she was not involved in her ex-partner’s mortgage business. She only did marketing for him, Kuehne said.

But Foster-Steers reminded jurors that Exius participated in the deals only because he “trusted Lucie Tondreau,” the prosecutor said during closing arguments on Monday. “Anything for Lucie, he was willing to do.”

And now she’s paying for it.

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