Sioux Falls man sentenced in aquaponics scheme
SIOUX FALLS — A Sioux Falls man who pleaded guilty to wire fraud and mail fraud after proposing to build an aquaponics facility near Brookings was sentenced in federal court Monday, July 15.
Tobias Ritesman, 42, was sentenced to nine years, or 108 months, in federal prison, followed by three years of supervised release, restitution in the amount of $680,000, and a special assessment to the Federal Crime Victims Fund in the amount of $1,800. Ritesman was convicted of 10 counts of wire fraud and eight counts of mail fraud.
Ritesman and co-defendant Timothy Burns were indicted by a federal grand jury on Jan. 9, 2018. Ritesman filed a petition to plead guilty on April 15, and the conviction stemmed from incidents in 2016 and 2017.
“This is an appropriate federal prison sentence for what was an ambitious and surprisingly audacious fraudulent scheme,” said U.S. Attorney Ron Parsons in a statement. “A lot of South Dakotans lost a lot of money as the result of the web of lies spun by this defendant.”
Ritesman, who called himself "The Tiger," started a company called Ritesman Enterprises in approximately 2012 and had three companies that operated under REI’s umbrella: Tinkers and Thinkers, Tiger Consulting, and Global Aquaponics, Inc. Global Aquaponics was active in pursuing investments for a proposed aquaponics facility to be built in Brookings, and the facility was supposed to raise fish and produce. In June 2016, authorities said, Ritesman then formed SD Food Security, LLC, which was also involved in the aquaponics project.
According to the FBI’s investigation, the fundraising plan for the aquaponics facility in Brookings was that Global Aquaponics would contribute $5.6 million to the project and own 51 percent of the facility, while SDFS would contribute $5.4 million to the project (raised primarily by selling investment shares) and own 49 percent of the facility.
Ritesman and Burns offered an investment opportunity in June 2016 that stated the facility would be based on a similar location in Maryland, and a memorandum said that the Global Aquaponics board included members with aquaponics experience. The memo identified a specific 40-acre parcel of land, and detailed how the new company would use the proceeds, including spending nearly $1.2 million to purchase the land.
The U.S. Attorney’s Office says between approximately May 2016, and August 2017, Ritesman and Burns received a total of $1,030,000 in investments in the project from 34 investors. Bank records showed that the money from investors was deposited into four different accounts and Ritesman and Burns were each stealing investor money and using it for their own purposes. Burns’ sentencing is set for July 22. Ritesman was immediately turned over to the custody of the U.S. Marshals Service.