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Charges: Minnesota broker bilked $2.5 million from clients

ST. PAUL -- The U.S. Attorney's Office on Tuesday filed a federal indictment against a Stillwater investment advisor for an alleged Ponzi scheme that lasted at least five years and bilked about $2.5 million from investors. Levi Lindemann, 39, was...

 

ST. PAUL -- The U.S. Attorney’s Office on Tuesday filed a federal indictment against a Stillwater investment advisor for an alleged Ponzi scheme that lasted at least five years and bilked about $2.5 million from investors.

Levi Lindemann, 39, was sued last year by the U.S. Securities and Exchange Commission, which said he took money from investors - including elderly clients and his own family members - and promised to invest it with high returns. Instead, Lindemann spent the money on his own expenses and misrepresented to investors what happened to their money, according to the SEC complaint.

Tuesday’s federal charges center on similar activities.

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Lindemann is charged with one count of mail fraud and one count of money laundering.

Attorney Paul Engh, who represented Lindemann in the SEC case and will defend him in the criminal case, said, “We will be entering a not-guilty plea at Mr. Lindemann’s arraignment.”

The federal criminal charges weren’t a complete surprise, Engh said. The SEC suit has been on hold because “the federal government was contemplating an indictment,” he said.

Court records show no activity in the federal lawsuit since December 2014.

According to the lawsuit and Tuesday’s criminal indictment, Lindemann operated an investment firm called Gershwin Financial Inc., which did business as Alternative Wealth Solutions.

From 2009 to November 2014, Lindemann “did knowingly devise and participate in a scheme and artifice to defraud and to obtain money by means of materially false and fraudulent pretenses, representations, and promises, and by concealment of material facts,” the indictment stated.

As part of his scheme, Lindemann obtained about $4.3 million from about 50 investors “by falsely representing that he would use the invested funds to purchase secured notes or other legitimate investments when, in fact, defendant Lindemann intended to and did use the invested funds to pay personal expenses and make Ponzi-type payments of promised returns to other investors,” the indictment stated.

He used about $2.5 million of his investors’ money for his own personal use, the federal charges stated.

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According to the SEC lawsuit, Lindemann provided his clients “with fabricated account statements documenting these Ponzi-like investment returns. In the statements, Lindemann fraudulently represented that (his company, Alternative Wealth Solutions) is a member of the New York Stock Exchange (NYSE) and the Securities Investor Protection Corporation (SIPC), which is a nonprofit membership corporation that guarantees the return of missing customer property up to a certain amount.”

His company was never a member of either organization, the SEC asserted.

Lindemann also provided to his investors “bogus” documentation and notes “to give the investments an air of legitimacy,” the SEC complaint stated.

“During this time period of his fraud, Lindemann purchased two new cars in cash, for a total of nearly $100,000,” the lawsuit stated.

The criminal money laundering charge against Lindemann stems from a $60,000 purchase from a local car dealership, according to the indictment.

Neither of Lindemann’s companies was registered with the SEC or the state of Minnesota as a broker-dealer or an investment advisor, the suit stated.

Lindemann’s investment operation is no longer active, and “he has been working full time outside of the industry,” his attorney said.

The $450,000 Stillwater home where Lindemann used to live is now owned by the bank, according to property records. It’s unclear where he currently resides.

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He and his wife were divorced last week.

The Pioneer Press is a Forum News Service media partner.

Related Topics: FRAUD
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