A former state fraud investigator was sentenced Friday to two years in federal prison for bank fraud and money laundering.
Steven Arthur Knigge, 71, had pleaded guilty to the crimes, which took place over a three-month period in 2015 and involved people out-of-state and overseas.
The Rapid City resident admitted being involved in sending emails to banks in Arizona, Georgia, Texas and Washington, in which the sender pretended to be an account holder and asked bank employees “to wire large amounts of money” to Knigge's Rapid City bank accounts, according to court documents.
Knigge targeted five banks and asked for a combined $146,000 between July and September 2015. Some $42,000 got through to his local Wells Fargo account; the rest of the transactions were blocked by the banks.
Knigge wired $30,000 of the fraudulently obtained money to people overseas, including $9,500 to Nigeria, which constituted money laundering.
“You were perfectly armed not to get caught in such a scheme,” U.S. District Court Chief Judge Jeffrey Viken told Knigge during his sentencing in Rapid City on Friday. Before retiring, Knigge worked for 32 years at the South Dakota Department of Revenue, where he was an auditor and fraud investigator.
Defense attorney Angela Colbath said Knigge committed the offenses while struggling with marital problems and after meeting someone overseas on an online dating site.
“He was in a place emotionally where he was looking for some comfort,” Colbath said. “He let his emotions lead the way and didn’t let his head interfere.”
Knigge began sending money overseas in November 2014, initially using his own money, said Assistant U.S. Attorney Benjamin Patterson. When he ran out of funds, Knigge apparently dipped into his children’s accounts and assets.
“He just took money from whomever,” said Patterson, who prosecuted the case. Then Knigge delved into “criminal conduct,” which was later uncovered by the FBI and IRS.
Patterson said Knigge planned to also personally benefit from the schemes.
When law enforcement told Knigge in 2015 that he was under investigation, Patterson said Knigge tried to cover his tracks by deleting 1,800 emails from his government-issued computer. Knigge explained doing so as preparation for retirement, the prosecutor said. Knigge was working at the state revenue department’s Rapid City office.
Colbath said Knigge doesn’t know the real identity of the person he met online, adding that Knigge’s offenses were so inconsistent with the man who built himself into a successful professional. His ex-wife expressed disbelief and genuine concern, the lawyer said.
Knigge told the court he was still trying to understand why he committed the offenses, saying it has brought him a lot of heartache and cost him friends.
Besides receiving prison time, Knigge was also ordered to repay a bank in Arizona and Washington a total of nearly $32,000. He will be on supervised release for three years after being released from prison.
Knigge’s ex-wife sat listening in the almost-empty courtroom gallery, at times with an anguished expression on her face.