This is a mortgage fraud case involving years of criminal activity, so I'm guessing that it's probably not too hard for the prosecution to produce witnesses who can say "yes, she sold me that crappy mortgage and used her laptop when I went to meet with her.", or direct information of her internet usage (ISP, or logs from cable modem), or observation of her using the laptop by police during the investigation.
Then they can't prove it's "your server" and thus order you to reveal the key.
(For example, if you have access to a credit card not in your name, you can set up an EC2 micro instance for free for a year. Then install TeueCrypt and be on your merry criminal way. What could the DOJ do?)
If they wanted to pin it to you, they could easily show timing correlations between your client system activity and the VM activity. Probably they would also go to the person who lent you their credit card and threaten them with prosecution unless they fingered you.
Cryptography is not going to save you from prosecution if you do any noteworthy crime. There is no security "in the cloud" from any government with a jurisdictional or financial relationship with the provider. (Though Tahoe LAFS is an interesting project).