Developer in hot water over condos

WASILLA - A developer working on downtown Wasilla condos was hit with federal charges this past week for alleged fraud in dealing with his bank.

According to a press release from the U.S. Attorney's Office, Lee E. Baker Jr., 55, who owns all the stock of Discovery Construction Inc., took out a $1.4 million loan from Denali Alaska Federal Credit Union in 2005.

According to the press release, Baker told the bank he would use the money to buy land in the Lakeview Estates subdivision. Borough tax records seem to indicate the "lake" in the subdivision's name is Wasilla Lake and that the subdivision is the one across the Parks Highway from the lake.

Baker was planning to build 52 duplex condos on the site in question.

According to federal authorities, Baker didn't tell the bank that his company had once owned the land, but he'd transferred it to himself so that his company could buy it back with the loan money.

The bank "did not know that the loan was actually used by Baker to reduce his shareholder debt to his company," the press release states.

The federal indictment alleges more crimes in Anchorage, where Baker is said to have lied to the same bank while "drawing down the proceeds" of a $9.2 million loan for an 85-unit apartment building on Northern Lights Boulevard.

As the project went forward, Baker submitted 12 requests to draw from the loan, saying he'd finished various parts of the work.

"Very little work had been done and the total amount completed in each request was false," according to the federal indictment.

Baker eventually defaulted on the loan. His dealings in Anchorage led to a money laundering charge for allegedly paying a contractor with that loan money for work done on a different project.

News reports on the case have described Baker as Anchorage's "condo king." He was apparently known for shoehorning cheap homes onto tiny lots.

Court records show a string of lawsuits in 2008 and 2009 filed by financiers and contractors in Anchorage against Baker and his company.

One of those among the flurry of lawsuits landed in federal court in 2008 when KeyBank sued Baker over his $379,569 boat, known as "The Discovery," which he was late making payments.

In the criminal case, Baker faces charges of fraud and money laundering. The U.S. Attorney's Office says that the charges could bring up to 30 years in prison, a $1 million fine or both.

Contact Andrew Wellner at Andrew.wellner@frontiersman.com or 352-2270.