Two 2010 affidavits that were the basis for the warrant for Rosemary Sauter-Frett’s arrest describe a series of complaints from clients who told investigators how the St. Thomas realtor had defrauded them, stealing hundreds of thousands of dollars.
The documents detailing 12 such cases were sealed at the time the warrants were issued in 2010 and Justice officials refused to discuss any details. The affidavits became available after Sauter-Frett was extradited back to St. Thomas on April 3, handcuffed to a representative of the V.I. Department of Justice.
Sauter-Frett fled the territory in 2010, allegedly taking more than $2 million of her clients’ money with her. FBI agents arrested her near San Diego in January. She had an advice of rights hearing April 4, at which prosecutors detailed the 13 counts of embezzlement by fiduciary and two counts of obtaining money by false pretenses, plus charges under the Criminally Influenced and Corrupt Organizations Act. Bail was set at $1.25 million.
The affidavits that were the basis for the arrest warrant were sworn to by Kenneth Schulterbrandt Jr., a special agent with the Special Investigations Division of the V.I. Department of Justice. At the time Schulterbrandt had more than 15 years in white-collar crime investigations and was a certified fraud examiner. He still works at the Department of Justice.
The first document was sworn in February, the second in September. Together they lay out details of the allegations, including the names of the victims. The Source is withholding them at this stage of the case.
According to Schulterbrandt’s affidavits:
• Victim 1 reported that Sauter-Frett issued him worthless checks amounting to $65,000 drawn on her My Dream Properties Inc., doing business as Re/Max Dream Properties. The check represented a refund of the earnest money deposit he had paid on property he had been trying to purchase through Sauter-Frett. When the sale fell through, Victim 1 asked repeatedly for return of his earnest money. He said in January 2010 he received a check dated Dec. 29, 2009. Sauter-Frett asked him to give her a few days before depositing the check. He held off on depositing the check until Jan. 20, 2010, but it bounced. Upon notifying Sauter-Frett the check had been returned, she told him to give her about 10 days to make good on the funds, but the funds were never restored, Victim 1 said.
• Victim 2 told Schulterbrandt that he paid Sauter-Frett’s office a deposit of $32,000 as an earnest money deposit to purchase a home. The sale fell through, Victim 2 said, and he requested the return his deposit. Victim 2 was to receive $31,000, and Sauter-Frett was to send $1,000 to the seller to cover liquidation damages. The funds were to have been dispersed on or about January 2010. Sauter-Frett made "a litany of excuses for why the escrowed funds have not been released ranging from wiring errors, to illness, to travel, staff training, to the Post Office and banks being closed, etc.," the affidavit says, but neither Victim 2 nor the seller received anything from her.
• Victim 3 alleged that he had placed a contract on property through Re/Max Dream Properties and issued two checks totaling $22,500 as an earnest money deposit. The funds were to be placed in the Re/Max escrow account and held until closing. Sauter-Frett was the signatory on the escrow account and the individual responsible for issuing checks from it, the affidavit says. On Jan. 29, 2010, during the closing, the selling broker told Victim 3 that Sauter-Frett had said the checks from the Re/Max escrow account would be delivered within the hour, but they never arrived and Sauter-Frett could not be reached by telephone. The closing was not completed on that day and no additional information has been provided about the missing funds. Victim 3 also said he was entitled to receive a rent check in the amount of $4,400 from rental of the property he was purchasing. Those funds were being held in the Re/Max Dream Properties escrow account as well. He did not receive those funds either.
Schulterbrandt investigated and found that the initial $1,000 deposit check was appropriately deposited into the Re/Max Dream Properties Escrow account. However, a second check for the balance of $2l,500, which Victim 3 submitted two weeks later, also to be held in escrow, was deposited into the Re/Max Dream Properties International Plaza Operating Account, which Sauter-Frett controlled.
• Victims 4, a couple, said they had offered to purchase a residence with Sauter-Frett as the selling broker on property listed by another broker within the Re/Max Dream Properties office. Victims 4 gave Sauter-Frett $1,000 for deposit, with the balance to come after the contract had been fully executed. The same day the Victims 4 also listed their condominium for sale with Sauter-Frett, adding the condition that their offer to buy the one home was contingent on being able to sell the condominium they had listed for sale with Sauter-Frett. The sellers did not agree to the contingency and struck that language from the contract and placed their initials next to the stricken language. They made a counter offer, increasing the price by $10,000, and signed the contract with the contingency language stricken out. The listing broker then forwarded that counter-offer to Sauter-Frett. Victims 4 talked several times with Sauter-Frett while the negotiations were taking place and said that in their last conversation, Sauter-Frett falsely told the victims the sellers had agreed to the contingency.
Victims 4 told Sauter-Frett that the remaining earnest money would not be transferred until they saw a signed contract confirming that the sellers had agreed to the price and the contingency. They said Sauter-Frett sent them by email what appeared to be signed contract from the sellers reflecting the price they had agreed to and including the contingency on the sale the condominium. Sauter-Frett did not provide Victims 4 with the portion the contract showing that the sellers had actually rejected the contingency clause, Schulterbrandt said. Several days later, believing they had a valid contract, Victims 4 wire transferred $99,000 into the Re/Max Dream Properties escrow account, bringing the total they had in the escrow account to $100,000.
Victims 4 believed they had been fraudulently made to believe that they had a binding real estate contract on the residence and filed a report with the FBI field office in Puerto Rico, which covers the St. Thomas district. The couple received an email drafted by the listing broker of the residence confirming that they never had binding contract for the residence and confirmed that Sauter-Frett had presented them with a fraudulent contract for the sole purpose of getting them to transfer the $99,000 to the Re/Max Dream Properties escrow account.
• Victims 5, another couple, claimed that in 2008 Sauter-Frett fraudulently induced them to deposit $700,000 into her Re/Max Dream Properties escrow account under the pretext that they would earn 20 percent interest per annum over 18 months.
The agreement was fraudulent on its face, Schulterbrandt wrote, since the Re/Max Dream Properties escrow account was a noninterest bearing account. The interest payments Sauter-Frett promised to Victims 5, if actually made, could only have been paid from funds placed in escrow for other specific real estate transactions, according to the investigator.
Victims 5 have neither received their principal amount of $700,000 nor the interest payments promised in the agreement, the document alleges.
• Victim 6 is the owner of another St. Thomas real estate company was involved in a sale with another broker from Sauter-Frett’s Re/Max Dream Properties. An earnest-money payment was being held in the escrow account controlled by Sauter-Frett, the affidavit said, and was never paid at the time the deal was to have closed. Victim 6 further complained that an additional $16,000 was deposited in the account on another transaction that was to have closed March 2010. Based on the earlier problem, Victim 6 was doubtful the escrowed funds would be made available by Sauter-Frett for the March closing. By that time Sauter-Frett had fled the territory and the money was not recovered.
• Victim 7 told Schulterbrandt he had deposited $7,000 with Re/Max Dream Properties toward the purchase of a home. In January 2010, after two years of waiting for the deal to close, Victim 7 visited Re/Max Dream Properties office with notarized letter canceling his contract with the agency and demanding return of his deposit. He said he was told he would have his deposit returned in two to three weeks, but never received his money or any explanation.
• Victim 8 said he entered into a contract for a home in Estate Bolongo through an agent with Re/Max Dream Properties. He put $5,000 in the Re/Max Dream Properties escrow account as earnest money, but the transaction was not completed and he requested the return of his deposit, which he never got.
• Victim 9 entered into contract with Re/Max Dream Properties to manage his rental property in Estate Mandahl from December 2009 through November 2010. He said he paid a $1,000 security deposit, which was placed in the Re/Max Dream Properties escrow account. On February 2010, Victim 9 received call from his Re/Max Dream Properties agent who told him the office was closing and the security deposit was gone.
• Victims 10, a couple, made two payments to Re/Max Dream Properties totaling $6,750, which represented the deposit for residence in the Raphune Vistas Development. In February 2010, the victims learned in the local media that Sauter-Frett, the owner/broker of Re/Max Dream Properties, had allegedly misappropriated the office’s funds and could not be located. They have not received their money back.
• Victims 11, a couple, paid $8,375 to Re/Max Dream Properties, which was supposed to be deposit for a residence in the Raphune Vistas Development. Victims 11 learned in the local news media that Sauter-Frett had allegedly misappropriated the funds and could not be located.
• Victim 12 told Schulterbrandt that in December 2009 she entered into a contract to purchase a residence in the Raphune Vistas Development. At that time, she gave Sauter-Frett a bank check for $10,000 as a deposit for the purchase. In January 2010 she cancelled the contract and said Sauter-Frett promised to refund her deposit.