ROCHESTER —
the former Mayo Clinic nurse anesthetist turned commercial real estate investment “guru,” was sentenced to three years in prison this week and to ordered to pay $5.39 million in restitution to a Bloomington, Minn., bank
In handing down her sentence, Judge Susan Richard Nelson described Onofrio as the “ringleader and architect of a vast bank fraud.” She said wanted to send a message to other would-be fraudsters that there is no such thing as a get-rich-quick scheme, according to a statement by the U.S. Attorney’s office in Minneapolis.
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Onofrio’s sentence will start on Feb. 10.
Onofrio’s attorney, Marsh Halberg, had requested one year of home detention or community confinement. The federal government, which brought the case against Onofrio, had asked for six years in prison.
The average prison sentence for people convicted of similar crimes in similar circumstances is five years, according to prosecutors.
Onofrio pleaded guilty to one count of bank fraud involving a Minnesota property in St. Cloud on July 10 in the U.S. District Court in Minneapolis. He was originally indicted by a grand jury and charged with three counts on Nov. 17, 2022.
Onofrio’s sentencing at the federal courthouse in St. Paul wraps up a complicated case that prosecutors described as involving $420 million in “fraudulently obtained bank loans” for 68 commercial real estate deals over a time period of about two years.
While none of the commercial properties listed in the 2022 grand jury indictment were in Olmsted County, Onofrio had been very active in buying and selling large commercial properties in Rochester. As part of the case, the court seized a $35 million bank account that he had with Premier Bank in Rochester.
Under the name Moose Enterprises LLC, he paid $7.7 million for the historic Massey and Blakely buildings at 16 Second St. SW and 210 First Ave. SW in downtown Rochester in January 2020.Under the control of a court-ordered receiver, they were sold for $4.5 million in 2024.
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Onofrio also purchased the Flats 55 apartment complex in Stewartville for $10.5 million under the name Stewartville Flats LLC at the end of 2021. It recently sold for $9.35 million.
He was also involved in other prominent local properties including the City Centre complex at 310 S. Broadway and the Tile Superstore & More complex at 2411 Seventh St. NW in Rochester, as well as the Wabasha Marina & Boatyard.
Onofrio also was involved with the $12 million purchase of the City Centre complex at 310 S. Broadway in 2020. He later sold the property, for $14 million, in 2021.
He was involved in the purchase and sale of a northwest Rochester retail center at 3801 Marketplace Drive NW in May 2021. He purchased it for $3.63 million and sold it four days later for $4.22 million.
In a related case, 82-year-old Rochester Realtor Merl Groteboer was sentenced to one year of probation and a $10,000 fine after pleading guilty to one count of making “false, fictitious and fraudulent” statements to a special agent of the Federal Bureau of Investigations during a voluntary interview in 2023. The interview was part of the investigation of Onofrio.
Prosecutors say Onofrio created a real estate investment system that was “guaranteed to make him rich” as long as the buyers and the banks didn’t fully understand what he was doing.
He would find undervalued commercial properties and negotiate purchase agreements allowing him to purchase the property at a later date for a determined price. Onofrio then assigned the purchase agreements to his investors for a higher price, “earning himself a substantial profit.” He did not tell the buyers about the purchase agreements.
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To line up inexperienced investors, Onofrio promoted his own financial success and real estate investment strategies in online professional networking groups, in YouTube videos and on a popular podcast called “Bigger Pockets” to craft a reputation as a real estate savant, who had cracked the code of commercial real estate investing.
“The problem with Mr. Onofrio’s investment program was that many of the aspiring real estate investors it attracted did not have the kind of money necessary to purchase the multi-million-dollar properties Onofrio offered,” according to the government’s case. “Banks typically will only approve a commercial real estate loan if the buyer has about 30% of the purchase price in cash, and very few of Onofrio’s investors had that kind of money. Mr. Onofrio therefore conspired with his investors to defraud banks by misrepresenting their creditworthiness in loan applications.”
That meant helping his clients prepare fraudulent financial statements to make it look like they had enough money to cover the down payment. When banks asked for proof of funds, Onofrio would temporarily wire funds into his clients accounts to create the illusion that they had enough money. He told the buyers to tell the banks that it was “family money.”
Sometimes he would actually loan the money to the buyer, but hide that fact from the bank.
“Onofrio could do this with little risk because the loan proceeds always exceeded the contract price, and the down payment was roughly equivalent to his assignment fee. So, Onofrio was effectively deferring part of his assignment fee by lending his investors’ money for the down payment. And even though these loans were unsecured, if the investors eventually defaulted it simply meant Onofrio received a smaller assignment fee than originally expected,” according to the government. “In other words, Onofrio could not lose. The only variable was how much he could win.”
While the judge and the federal prosecutors painted Onofrio as a “ringleader” and “fraudster,” his attorney as described him as a remorseful man who was a home-schooled, former missionary and is a devoted Christian who has led a law-abiding life, with the “exception of the 14-month range of his offense conduct.”
About 30 letters of support from his family, friends and church were sent to the judge to ask for mercy in his sentence.
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