NEW YORK - A 46-year-old Alexandria, Minn., man was arrested with two other men in a multi-million dollar money laundering sting conducted by federal authorities in New York.

Kenneth Ardell Landgaard is charged with conspiring to launder more than $2 million of proceeds from what he and two other suspects, Michael J. Dodd, 65, of Panama City, Panama, and James Robert Shipman, Jr., 64, of Hollywood, Florida, thought to be a penny stock fraud scheme, according to the U.S. Attorney’s Office in New York.

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The money was, in fact, provided to the defendants by an undercover law enforcement agent who posed as a criminal stock promoter as part of a sting operation.

Landgaard and Shipman were arrested in July after flying to an airport in New York on a private jet to take possession of $2.2 million in cash they allegedly agreed to launder through banks in Panama and Belize. Dodd was arrested a few hours later at a Manhattan restaurant where he expected to meet with the undercover agent.

On Dec. 10, all three suspects entered pleas of not guilty to all counts. Their next court date is scheduled for Jan. 13.

According to court documents, Dodd would set up off-shore foundations in Panama for clients and coordinated transport with Landgaard on private jets. Dodd is a U.S. citizen living in Panama and Landgaard owns and operates Magjets Group, an aviation company in Panama City. Shipman was a business partner of Landgaard and Dodd.

“As charged in the criminal complaint, these defendants agreed to transport millions of dollars of stock fraud proceeds on private jets to Panama and then engage in a series of financial transactions,” said Kelly T. Currie, acting U.S. attorney for the Eastern District of New York. “They did so with the intention of laundering the money, evading federal tax and banking laws and lining their own pockets.”

“Conspiring to launder millions of dollars on a private jet may have seemed like a great idea to evade law enforcement but we have proven this method does not fly,” said Raymond Parker, New York special agent-in-charge for Homeland Security Investigations. (HSI). “HSI and its partners will continue to investigate and prosecute those who attempt to conceal and launder illicit proceeds, no matter what the method.”

According to the complaint, the suspects agreed to launder cash for an undercover FBI agent who posed as a corrupt stock promoter.

In his dealings with the suspects, the agent represented himself to be a middleman working with corrupt stock brokers who artificially inflated prices for worthless stock in exchange for high commissions.

In exchange for a 13 to 15 percent fee, the defendants agreed to launder $2.6 million.

In conversations recorded by the FBI, the defendants explained in detail the measures they took to avoid detection of their money laundering scheme by law enforcement.

Dodd insisted that the undercover agent download and use encryption software for online chats and voice communications.

Landgaard insisted that the cash be provided in expensive Louis Vuitton duffel bags, and Shipman explained their reasoning: “You know why they do that? Because cops can’t get the authority to buy a Louis Vuitton bag, it’s too expensive ... they can’t get the authorization to buy a Louis Vuitton bag. And if you think about it, it’s very smart.”

Landgaard and Shipman also insisted that the undercover agent buy a “throwaway” or “burner” phone on which to speak to them about the scheme.

At this point, the charges in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the men face a maximum sentence of 20 years’ imprisonment.

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.