Emily Welker, Published August 05 2013
Former Fargo broker gets 10 years in prison for Ponzi scheme
“I wish I could disagree with these victims’ statements,” Medhus said at the sentencing hearing in Cass County District Court. “I cannot.”
Medhus pleaded guilty in June to two counts of theft, 13 counts of fraudulent practices and one count of offering to sell unregistered securities.
Court documents say Medhus took investors’ money for his own use instead of investing it, then gave them fake or exaggerated account statements. Prosecutors said Medhus had been working his Ponzi-style scheme on his clients since 1995, although the case only alleged misconduct going back to 2007.
One of the two family members of victims who spoke in court at Monday’s sentencing asked the judge to give Medhus the maximum time allowed by law. All 16 counts to which he pleaded guilty were Class B felonies, which carry a maximum prison sentence of 10 years.
“Bob didn’t have remorse or a guilty conscience, taking advantage of people who thought they were friends,” said Steve Johnson, son of Sherwood and Sharon Johnson.
Court documents state Medhus began working with the Johnsons in 1995, when he took about $120,000 from their Putnam retirement account. He admitted he took about $95,000, according to documents, and over the years, sent them letters written on his company’s letterhead, Associated Financial, that exaggerated the earnings by amounts in the hundreds of thousands of dollars.
Another family member took the stand on behalf of a victim who died before the case was resolved.
Roger Copeland said his brother-in-law, Craig Straabe, changed after he learned Medhus was bilking some of his clients out of their retirement money.
“He was in complete denial,” at first, Copeland said. “He said Bob wouldn’t do this to me – they’d been friends all their life.”
After the truth came out, Straabe’s health began to be affected, he said.
Medhus’s attorney John Goff asked for a reduced sentence to be served on work release to allow Medhus to pay back some of the $900,000 he stole.
“Bob Medhus is here to take responsibility for his conduct and his actions,” said Goff, acknowledging it was unlikely Medhus would ever be able to repay it all. “We’re not standing here saying he had a bad childhood … we don’t understand why Bob did what he did.”
Prosecutors asked for an eight-year sentence for Medhus, two years less than the 10 years Judge Frank Racek gave him.
Racek said the former broker’s request to make restitution rang hollow, since he had not paid restitution since being charged in January.
“Not one dollar,” he said.
Racek said rather than taking the money after a medical emergency for a family member or over a catastrophic event such as divorce, Medhus simply took it for his own use. And, the judge pointed out, some of his victims were his childhood friends.
“The message to the public is that if you’re caught doing these crimes, you will be held accountable,” he said.
Readers can reach Forum reporter
Emily Welker at (701) 241-5541