Michael Hudalla plays fast and loose

Motorcycle mogul faces the music

After months on the phone and thousands of dollars in attorney's fees, Manley finally filed for bankruptcy.

"Can you see why I have a little animosity toward Mike?" he says.

   

Michael Hudalla
courtesy of Jay Golden
Michael Hudalla
When he married in Scotland, Hudalla flew in his three closest friends
courtesy of Jay Golden
When he married in Scotland, Hudalla flew in his three closest friends

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WHEN HIS PHONE RANG, Dick Brown answered. Hudalla was on the line, and Brown was hoping he had good news.

For months, he'd been complaining about his paltry retirement savings. He knew the $60,000 he'd saved was far too little.

Hudalla pitched a way Brown might now retire comfortably: investment properties. Hudalla promised to help Brown find renters and loan him the extra money for the down payments. All Brown had to do was sign a few papers.

"He set it in motion," Brown says. "It was like any house closing: Sign this here, sign that, initial this, date that."

By 2007, Hudalla was CEO and owner of Enzo Mortgage Group in downtown St. Paul. The fantastic investment he had for Brown turned out to be three townhomes in Oak Park Heights, a village near the Wisconsin border, where the second-biggest employer is the nearby state prison.

Brown took out $814,000 in loans. Hudalla's colleagues wired money for the down payments to Brown's bank account, and Hudalla allegedly collected commissions of 16 to 26 percent of the purchase price—about $230,000 in total—when the sales closed, according to court documents.

At first, it wasn't hard to find renters. Hudalla kept the properties leased and everything was going fine.

But in 2008, the economy tanked and housing prices collapsed. Suddenly, Brown couldn't find tenants.

"One guy bought a house, I think it was like three doors down, and he was paying $500 a month less than I was charging him for rent," Brown says. "How the hell am I supposed to compete with that?"

Within the year, Washington County foreclosed on all three of Brown's properties. His small nest egg squandered, Brown was forced to file for bankruptcy.

"When we were at Trackstar, I was his best unpaid employee," says Brown. "We'd go in there Saturday morning and have some donuts and hot dogs or whatever was on the grill for the day, and shoot the shit about motorcycling. End of day comes around, and we all went for a ride."

   

IN EARLY OCTOBER, an official-looking piece of mail arrived at the seven-bedroom, four-bath Mendota Heights home where Hudalla lived. It was a court summons.

The letter leveled two felony racketeering charges against the former motorcycle king. The first count accused Hudalla of participating in a pattern of criminal activity including theft by swindle and concealing criminal proceeds. The second alleged he knowingly invested criminal proceeds in an enterprise or property.

Both charges carry heavy penalties that could land Hudalla in prison for 40 years.

Hudalla's next scheduled appearance in Hennepin County District Court is May 31. No trial date has yet been set.

For now, he's a free man. Although Enzo folded about the time that the criminal charges became public, Hudalla now works for Acceptance Capital Mortgage Corporation, a firm based in Spokane, Washington. The company is licensed to do business in Minnesota, and Hudalla is listed as a branch manager.

He works from the Mendota Heights mansion he shares with his girlfriend and three children: a 12-year-old daughter, an 8-year-old son, and a new baby.

"I have a lot to say about the Enzo case," Hudalla wrote in an email "However, until I speak with my attorney that topic will be off the table—sorry."

Hudalla's attorney, a Hennepin County public defender, advised him not to speak and declined to talk about the case himself.

Friends say that Hudalla seems unfazed by the possibility of spending four decades in prison. He recently bragged of selling millions' worth of product. Bankruptcy paperwork, however, places his income last year at a modest $37,000.

"Michael makes it sound like he's really facing nothing more than a minor inconvenience," says Leir. "Like a DWI."

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