Former Grafton stockbroker gets plea agreement, pays restitution of $185,000Ross Haugen faces more felony counts in separate case alleging he took $2.5 million from Walsh County clients
Under an agreement with the prosecution, a former stockbroker in Grafton, N.D., and Grand Forks, pleaded guilty this week to two counts of acting as an unregistered financial advisor.
By: Stephen J. Lee, Grand Forks Herald
Under an agreement with the prosecution, a former stockbroker in Grafton, N.D., and Grand Forks pleaded guilty this week to two counts of acting as an unregistered financial advisor.
Ross Haugen was sentenced in state district court in Grafton to three years of supervised probation and paid restitution of $185,000 to three victims in the two cases. About a dozen other charges in the cases were dropped.
But Haugen, who lives in the Twin Cities, still faces similar felony counts in a separate case, called Coadum, alleging he took $2.5 million from six clients in Walsh County, said Walsh County State’s Attorney Barb Whelan.
Those charges have ties to a federal case in Georgia in which authorities allege Haugen helped raise $30 million in phony Coadum investments, with millions still stashed in foreign accounts.
Haugen’s plea agreement Monday in Grafton involved comparatively modest amounts he took from an elderly couple and two elderly men in Walsh County.
“They all got compensation in full,” said Whelan.
“We would not accept an Alford plea,” Whelan said, referring to a guilty plea in which a defendant admits no wrong but acknowledges there is enough evidence to convict him. “He had to plead guilty to the charges and admit his wrong-doing.”
Haugen appeared in court with his attorneys, Steve Meshbesher from Minneapolis and Robert Fleming from Cavalier, N.D.
Meshbesher said the “substantive charges, of fraud, swindle, theft,” against Haugen were dismissed.
“He pled on a technicality . . . of giving advice without a license,” Meshbesher said.
Whelan said she weighed the cost of pursuing all the charges against getting the victims’ money back.
“If I had taken it to trial, I could have gotten convictions,” Whelan said. “But the end result is, if he had gone to jail, I would never have gotten the money for (the victims).”
Instead, the $185,000 would have been spent on Haugen’s defense, Whelan said.
The conditions of Haugen’s three-year probation prohibit him from acting as a stockbroker, financial advisor or agent under state security laws and require him to give his probation officer in Minnesota “full access” to all his computer and financial records and “any other type of records relating to his finances.” He also is to have no contact with the victims, Whelan said.
Meshbesher said Haugen hasn’t been able to work as a securities agent for years anyway, since losing both his federal and North Dakota securities licenses.
“His probation is of no consequence,” Meshbesher said. It allows him to travel within the United States and Puerto Rico and its deferred imposition means once it’s up, Haugen will have no felony record on the charges, he said.
But Whelan said she still hopes to put Haugen behind bars on six similar felony counts in the Coadum case that charges Haugen took $2.5 million from six clients.
“We’ll see,” Meshbesher said, pointing out Whelan already has dismissed about 40 counts of theft and fraud against Haugen in the Coadum case.
In fact, Haugen may end up testifying against others in the federal Coadum case, Meshbesher said.
A federal court in Atlanta last December charged James Jeffrey and Thomas Repke on 22 counts of fraudulently raising $30 million from 150 investors in the U.S. and Canada in the Coadum scheme. Awaiting trial, both face maximum penalties of 20 years in prison and a $250,000 fine.
Haugen is alleged to have been the key salesman in the Coadum deal, collecting more than half the $30 million from clients, much of it wired to bank accounts in Europe, not invested.
A federal receiver continues to track the money and says that millions remain in accounts in Switzerland, Malta and Andorra.
Earlier this year, Whelan dismissed related charges against Haugen’s alleged co-conspirators, David Hampton of Florida and William Fisher of Oklahoma, in return for their cooperation in her prosecution of Haugen.
‘They lied to him’
But Meshbesher says Haugen himself is a victim of the “real bad guys,” Jeffrey and Repke, as well as Hampton, in the Coadum case.
“They lied to him,” Meshbesher said. “The people who created Coadum caught him as well as his customers. I spoke to the U.S. attorney (Wednesday) in Atlanta and they might want to have him assist them with prosecuting Jeffrey and Repke.”
Haugen worked as a stockbroker in Grafton in the 1980s and moved to Grand Forks in the 1990s; he was fired from Merrill-Lynch in Grand Forks in 2001 for using unethical practices, a former colleague said.
The federal Securities and Exchange Commission still has an outstanding judgment of $1.4 million against Haugen.
Haugen is working, Meshbesher said, but he declined to provide details of the work.
“He’s broke. He’s lost everything. He and his wife are living in the basement of his daughter’s and son-in-law’s house in the Twin Cities,” Meshbesher said. “They basically have no money and his wife’s family (members) are raising money to help him out with this disaster.”
Family and friends raised the $185,000 in restitution paid this week to the three former clients of Haugen, Meshbesher said.
Whelan said she expects state District Judge Laurie Fontaine soon will set a trial date for Haugen in the Coadum case in Grafton.
Reach Lee at (701) 780-1237; (800) 477-6572, ext. 237; or send email to email@example.com.