BISMARCK, N.D. - Federal prosecutors on Tuesday, Oct. 15, filed sentencing recommendations for grain trading fraudster Hunter Hanson, tweaking restitution downward.
Hanson, 22, formerly of Leeds, N.D., and now staying with family in the Sheyenne, N.D., area, on July 30 pleaded guilty to federal wire fraud and money laundering charges. U.S. District Judge Daniel Hovland is scheduled to sentence Hanson Nov. 12 in Bismarck. The defense as of Oct. 16 had not yet filed its sentencing recommendation. They have until Nov. 5 to do so.
Hanson and his Midwest Grain Trading and NoDak Grain entities, based in Devils Lake, N.D., failed to pay more than 60 farmers and grain companies for commodities he acquired from them across a year's time, owing millions in the end. State investigators and prosecutors in a separate case described the operation as a Ponzi and money laundering scheme, in which Hanson laundered money through a used car business.
Hanson's case rocked grain industry regulation in North Dakota, leading to the movement of the task from the North Dakota Public Service Commission to the North Dakota Agriculture Department and to the creation of a North Dakota Legislative Interim Committee study. The Public Service Commission did handle Hanson's case.
Jonathan J. O'Konek, an assistant U.S. attorney in the case, working on behalf of U.S. Attorney Drew Wrigley, requested that Hanson:
• Serve the "guideline" range of 78 months to 97 months (6.5 years to eight years) on counts one and two to run concurrently.
• Serve a three-year supervised release after that sentence.
• Pay $11.1 million in restitution to victims, a figure which was less than the $11.4 million in original claims to the North Dakota Public Service Commission.
• Pay a $1.26 million monetary judgment.
In the memorandum, O'Konek said the explanation for the recommendation was spelled out in a "sentencing memorandum supplement," which is not public.
Federal sentencing guidelines take into account offense levels, offender criminal history, number of victims and severity of crimes to provide for standardized sentences. The guidelines are not mandatory, though federal judges more often than not issue sentences in the ranges. The judge takes input and can deviate from guidelines, which are affected by factors such as age and previous legal issues.
O'Konek wrote that the prison range would serve to "protect the public" and "deter (Hanson) from committing a similar scheme" in the future. It would also punish him to "promote respect for the law." He acknowledged Hanson's young age, but asked the judge to "consider the defendant's impact upon his victims, some of whom, as a result of the defendant's fraud scheme, face financial collapse."
In the memorandum, O'Konek said Hanson used email communications to "lull farmers or elevators into a false sense of security, to postpone inquiries, or to make his transactions between the farmers, elevators, or brokers less suspect." He used multiple bank accounts, engaged in check kiting to cover his deposits and withdrawals, and laundered money between his bank accounts and other businesses, including Hanson Motors, a used car dealership at Belcourt, N.D., on the Turtle Mountain Band of Chippewa.
Hanson often did not have sufficient funds in his bank accounts when he remitted payments to farmers and elevators for money owed on the agricultural commodities purchasing contracts. He bought commodities above their market rate and sold them for less, simply to "maintain cash flow."
In a separate but related case, Hanson still faces consequences in a criminal case for writing $94,000 in non-sufficient-fund checks in Mountrail County. Hanson appeared in court at Stanley, N.D., on Sept. 28, where he acknowledged failing to pay restitution on time because he was in federal custody.
Wade Enget, Mountrail County state's attorney, on Wednesday said the federal sentence would not make the county jail sentence go away, and that it could be imposed after Hanson is finished with any federal time he serves.
Public Service Commissioner Randall Christmann on Wednesday, Oct. 16, said his investigators are in the process of finalizing what claims against Hanson's businesses are considered valid and will make a full report.
East Central Grain Marketing Inc. of Minnetonka, Minn., the brokerage company that introduced Hanson to almost all of its clients, filed a claim of $595,674.92 against the trust for lost brokerage "agreed upon with each trade," but Dan Stommes, the company's president, in February asked that his claim "not be considered" unless all of the claims of farmers, elevators and resellers had first received 100% of their claims.
"You may be wondering why we are making this request," Stommes said. "The short answer is that we are more concerned with those who lost product than we are with our losses." Christmann declined comment on the ECGM request, except to say it is "unusual."