AFTERNOON EDITION

Among those covering today’s decision by Ramsey County Judge Gearin not to take up Gov. Dayton’s plea for a mediator in the budget dispute, including our Eric Black, is MPR’s Tom Scheck. He writes: “The motion was opposed by attorneys for both the House and Senate. ‘It just doesn't apply here,’ House Attorney Eric Magnuson said. ‘The courts don't tread on the functions of the other branches of government.’ Gearin said the role of crafting a budget should be left to the governor and the Legislature. ‘Those bodies have the institutional responsibility to resolve the budget crisis,' Gearin said. ‘It's not the court's role.’ Gearin also refused to allow four Republican Senators to intervene in the suit. Sens. Warren Limmer, Sean Nienow, Roger Chamberlain and Scott Newman wanted to argue that the courts are prevented by the state Constitution from ordering state spending for essential services, but Gearin said the four are already represented by attorneys for the full Senate.”

Here, Eric writes: “Interestingly, the Senate’s lawyer, Thomas Bottern, did not support the request of the four [GOP Senators] to intervene. The result of the ruling is twofold: One, there is now no one asking the court to order a special session. Two, the four senators had indicated that they would seek to remove Gearin from the case on bias grounds if they were admitted as parities to the case. In opposing the admission of the senators, former U.S. Attorney David Lillehaug, Dayton's new special counsel for shutdown issues, called the senators’ legal position ‘the oddest platypus I have ever seen.’ ”

Could anything be more predictable than Gov. Dayton and the two GOP leaders failing to agree … on how to meet? Basically, Dayton also wants minority leadership with them in this weekend’s proposed “marathon discussions.” Mike Kaszuba and Rachel Stassen-Berger of the Strib report: “Dayton spokeswoman Katharine Tinucci defended the governor’s decision. The governor ‘insists on the right to bring to the meeting the people necessary to negotiate a fair and balanced budget solution,’ she said. Even before the breakdown, there was already some conflict in the meeting goals. Zellers and Koch said they planned to push Dayton for agreement on individual bills, such as transportation funding and K-12 schools. Dayton said before the meeting that he would not sign individual budget bills without an overall budget agreement. The governor also said that he would not sign the Republicans' two-year, $34 billion budget, and remains committed to raising taxes on the wealthiest Minnesotans to fund a $36 billion budget. Dayton also largely dismissed a ‘lights on’ proposal that would fund most state services beyond June 30, saying there was plenty of time to reach a broader agreement.

Ms. Stassen-Berger and her employer continue to take their daily flogging from Power Line’s Scott Johnson: “The Star Tribune's Mike Kaszuba and Rachel Stassen-Berger report on the latest events in the Minnesota budget standoff. Having agreed to meet alone with the Republican legislative leaders in a marathon session this weekend to avoid a government shutdown, Governor Dayton introduced wrinkles that put the agreement in doubt by the end of the day. It's an interesting story. As I read it, Dayton is making it hard for his friends at the Star Tribune to cover for him. He isn't giving them much to work with. ... Dayton's previous unwillingness to negotiate with Republicans has been highlighted by his repeated requests for a mediator, including in his court filing over the shutdown. I think that this background is helpful to an understanding of the story regarding the apparently failed plan for talks between Dayton and Republican legislative leaders featured in the Star Tribune today.”

The mortgage fraud story du jour gets plenty of coverage. John Welbes of the PiPress writes: “What prosecutors called a sophisticated fraud scheme, which targeted homes in foreclosure, resulted in criminal charges against four individuals Wednesday. From June 2009 until August 2010, the four used forged documents and other trickery to purchase at least 65 homes in the Twin Cities and greater Minnesota, according to a criminal complaint filed in Hennepin County District Court. The scheme involved at least $10 million in mortgage loans. ... Prosecutors see the Obers' scam as a potentially ominous sign. "Unfortunately, we think that this could be the second wave of criminal activity resulting from the housing crisis," said Michael Freeman, the Hennepin county attorney, speaking at a Minneapolis news conference Wednesday. The case started with an investigation by the Minnesota Department of Commerce, which also has brought civil charges against those involved with the goal of revoking their real estate licenses. The Hennepin County Attorney's office has prosecuted 53 mortgage fraud schemes in the past five years, Freeman said. But while the earlier wave of fraud rode the crest of easy financing, the Obers' alleged scheme used elaborate means to benefit from the foreclosures that followed the crash of the market.”

Dan Browning’s Strib story says: “Brandon Johnson, a detective with the Minnesota Department of Commerce insurance fraud division, outlined the investigation in a 23-page complaint. It summarizes nine transactions that the defendants allegedly brokered through Franklin American Mortgage Corp. (FAMC). The defendants collected loan origination fees of $7,000 to $8,000 per transaction, and ‘kickbacks’ on those transactions ranging from $63,000 to $157,000, for a total exceeding $840,000, the complaint says. FAMC's internal review found that in 2009 and 2010, the defendants brokered about $10 million in FHA-insured mortgage loans from the firm on 65 properties. But FAMC wasn't the only lender, the complaint says. HUD estimates that the defendants brokered a total of about $23 million in loans, which were used to buy 136 properties in the Twin Cities area and outstate Minnesota.”

Then, on another end of the finance industry, Jennifer Bjorhus of the Strib writes: “A federal grand jury on Wednesday indicted two officers of a failed St. Paul bank for covering up a $1.9 million check-kiting scheme. John A. Markert, 57, of Mendota Heights; Gregory P. Pederson, 43, of Roseville; and George L. Wintz Jr., 71, of Minneapolis, were each charged with five counts of misapplication of bank funds. If convicted, they face a maximum of 30 years in prison on each count. Markert was the former president and Pederson the chief credit officer of Pinehurst Bank, a small bank founded in 2004 whose sole branch was in St. Paul's Highland Park. According to the indictment, Wintz, described as the young bank's ‘newest and largest customer,’ wrote batches of checks between various business accounts at Pinehurst and another unidentified bank, inflating the accounts. Wintz owns or controls three Minneapolis trucking and warehouse companies: McCallum Transfer Inc., Triangle Warehouse Inc. and Cue Properties LLC.”

Quite the chase in southern Minnesota Wednesday. Amanda Lillie of the Austin Daily Herald reports, “An escaped inmate was shot and killed by an Iowa state trooper near Floyd, Iowa, after police chased him through upper Iowa and southeast Minnesota at high speeds for more than an hour Wednesday afternoon. Mower County Sheriff Terese Amazi said the chase began in Iowa after the man reportedly stole a vehicle from a Department of Transportation garage. According to scanner traffic Wednesday, he was driving a white and camouflage 2002 Chevy Silverado pick-up. A warrant was issued Wednesday morning for the man’s arrest after he escaped from a Wisconsin prison, according to a statement by the Iowa State Patrol.”

According to a Survey USA Poll, T-Paw is tied with President Obama here in Minnesota. Caitlin Huey-Burns of Real Clear Politics writes: “In a head-to-head matchup, Barack Obama and Tim Pawlenty are tied in Minnesota, a state the president won by 10 points in 2008, according to a new poll taken shortly after the presidential debate in New Hampshire last week. Minnesota Rep. Michele Bachmann, who has been nationally praised for her debate performance, picked up ground among voters in the state as well. Though he was criticized for being too soft on Mitt Romney in the debate, Pawlenty is holding his own among voters in the state he led for two terms: He matches Obama in ballot support with 46 percent, the SurveyUSA poll shows. Pawlenty polls the highest among 35- to 49-year-olds while Obama wins the 18- to 34-year-old grouping, and more independents support the president than they do their former governor. Pawlenty defeats Obama in the south, west and northeast regions of the state, but voters in the Twin Cities back the president. The same poll taken three weeks ago had Pawlenty trailing Obama by five points. Fifty-three percent of voters think Pawlenty is qualified to lead the country.”

The AP is reporting an odd incident involving a flight into Newark from Minnesota. “Delta Flight 1972 had landed around 11 p.m. Monday and a cleaning crew reported the incident as the plane sat at Terminal B’s Gate 53 early Tuesday. Authorities told The Star-Ledger of Newark the object was wedged between seats 21B and 21C. No one had been assigned the seats. The object had the body of a clear pen, with an electrical button trigger and a nail and alligator clip protruding from it. A battery was held by electrical tape, and next to it was a flashlight top.”