A South Dakota man has been charged with more than $1 million worth of wire fraud and money laundering just two months after his girlfriend pleaded guilty to acting as an illegal foreign agent for Russia.
Paul Erickson, 57, of Sioux Falls, was indicted Tuesday by a federal grand jury on 11 counts, according to a news release issued Wednesday by Ron Parsons, the U.S. attorney for South Dakota. Erickson had already been in the news for several months because of his romantic relationship with Maria Butina, who pleaded guilty in December to serving as an illegal foreign agent.
Erickson appeared before U.S. Magistrate Judge Mark A. Moreno on Wednesday and pleaded not guilty.
The maximum penalty upon conviction is up to 20 years in federal prison for each count, a $250,000 fine for wire fraud, a $500,000 fine for money laundering, three years of supervised release, and up to $1,100 to the Federal Crime Victims Fund. Restitution may also be ordered.
The indictment alleges that on or about 1996 through August 2018, Erickson knowingly and unlawfully devised a scheme and artifice to defraud and to obtain money from many victims by means of false and fraudulent pretense, representations and promises.
Erickson owned and operated Compass Care Inc., Investing with Dignity LLC, and an unnamed venture to develop land in the Bakken oil fields in North Dakota. Erickson allegedly made various false and fraudulent representations to individuals located in South Dakota and elsewhere to induce those investors to give him money to invest in his businesses, as part of a scheme to defraud them and personally enrich himself.
The indictment says Compass Care was a fraudulent scheme in which Erickson led investors to believe that he was in the business of designing, building and managing assisted living residences for senior citizens around the country. Erickson's false and fraudulent claims to investors, according to the indictment, included a claim that returns on investments would be paid back within a year, that Compass Care oversaw 27,000 facilities in 26 states, and that Compass Care facilities had a development cost of $6 million and generated $1.7 million in annual gross revenues at full occupancy.
Investing with Dignity was presented as a company developing a wheelchair that allowed people using it to go to the bathroom without being lifted out of the wheelchair, the indictment says. Erickson allegedly promised investors that he could double or triple their original investment in as little as six months.
In the Bakken oil field venture, Erickson allegedly represented to investors that he was purchasing property in the Bakken oil field area to build single-family residences. He allegedly indicated falsely to investors that his projects had or were in the process of being built, and that returns of 25 percent to 90 percent could be had in as little as three months.
In all three business ventures, Erickson allegedly falsely guaranteed that he could personally repay the full amounts contributed by investors.
The one count of wire-fraud stems from an allegation that many of the investor-victims wrote Erickson checks, which he deposited into his accounts at Home Federal Bank and Wells Fargo Bank in Sioux Falls. "Each check was subsequently entered into the banking system causing interstate electronic transfer of funds from the source bank through the Federal Reserve Bank in Minneapolis, Minnesota, to Wells Fargo Bank and Home Federal Bank in South Dakota," the indictment says. The indictment goes on to list 22 such transactions from 1999 to 2017 totaling $1,203,471.20.
Counts 2-8, for money laundering, are based on seven payments to individuals from 2014 to 2017 totaling $129,000. Counts 9-11, also for money laundering, are based on three transactions from 2015 to 2017 totaling $59,472.09.
Victims and individual recipients of money are listed only by their initials in the indictment. The initials "M.B.," which match those of Maria Butina, appear twice in the indictment. So does a payment to American University, where Butina was a student.
The investigation is being conducted by the Federal Bureau of Investigation and the Criminal Investigation arm of the Internal Revenue Service. Assistant U.S. Attorney Jeffrey C. Clapper is prosecuting the case.
Erickson was released on a bond of an undisclosed amount. A trial date has not been set.
Erickson did not immediately return a message Wednesday evening from the Journal. The court file says Erickson has retained attorney Clint Sargent of Sioux Falls, but the Journal was not immediately able to reach Sargent.
Meanwhile, Erickson's 30-year-old girlfriend, Butina, is awaiting sentencing for acting as a foreign agent for Russia.
Court documents in Butina's case repeatedly reference an alleged co-conspirator identified as U.S. Person 1, who is Erickson. But as of Wednesday, he had not been criminally charged for any Russia-related activities with Butina.
The Butina case in Washington, D.C., and the wire-fraud and money laundering case against Erickson in South Dakota are separate cases, but court documents in the Butina case have indicated she was cooperating with investigators in South Dakota and was providing them with information about Erickson.
Erickson grew up in Vermillion and has had a Sioux Falls apartment in recent years. His colorful life prior to his involvement with Butina included working as a top staffer in Pat Buchanan’s 1992 presidential campaign, and serving as an entertainment agent for John Wayne Bobbitt after Bobbitt’s penis was infamously severed in 1993.
Staff with the Pennington County Sheriff's Office have planned a walking taco and bake sale fundraiser Thursday for their co-worker, who was suddenly diagnosed with a serious and rare disorder.
Keith Fenner, a corrections officer at the jail, has been at Regional Hospital since Jan. 18 after being diagnosed with Guillain-Barre syndrome, a disorder that attacks a person's nervous system, causing weakness, numbness and paralysis, according to a flyer for the fundraiser. Fenner is in "severe pain," especially at night, and is having difficulty with eye and facial movements, including speaking, chewing and swallowing. He was recently moved out of the intensive care unit.
"The symptoms and complications of GBS have changed the Keith we know," the flyer says.
The fundraiser will be used to support Fenner's medical bills for treatment and physical therapy. It may take months or years for him to fully recover. Fenner and his wife, Kara, have an infant son named James.
The event runs from 11 a.m. to 1 p.m. Thursday, Feb. 7, at the Public Safety Building, 300 Kansas City St., in Rapid City. Andy Bartling, a representative with the financial services company Modern Woodman, has agreed to match the funds raised at the event.
Four days after 9-year-old Serenity Dennard ran away from a residential youth facility in rural Pennington County, the facility is focused on supporting its grieving staff and youth.
"We continue to give our staff and the children we serve total support," Bill Colson, executive director of the Children's Home Society, said Wednesday.
Youth at the Black Hills Children's Home, located near Rockerville, already receive therapy since the facility provides schooling and intensive therapy in both outpatient and inpatient (meaning people live on site) settings for 4- to 14-year-olds struggling with abuse, trauma, and mental and behavioral health, according to its website.
Staff at the Children's Home, which includes mental health professionals, are being offered both individual and group therapy to process their missing client, Colson said.
Dennard went missing around 10:45 a.m. Sunday morning when she ran away from the Children's Home while playing inside the facility's gym, Colson said.
Dennard and three other children were being supervised by two staff members when one of the other children ran away but stayed inside the building, Colson said. As a staffer ran after that child, Dennard then took off herself, running outside. Because the remaining staff member was still supervising two other children, the staffer stayed put and called for help rather than follow Dennard and leave the others behind.
Other staff soon arrived to find Dennard, but to no avail, Colson said.
The sheriff's office said Tuesday that Dennard was last seen at 11 a.m. Sunday walking north on South Rockerville Road. The office said that a couple, a man and a woman in their late 20s or early 30s, were the last people to have seen her.
"I'm very proud of our staff and I don't think anybody was negligent. They did what they needed to do," Colson said.
"Flight risk is a common concern but is a rare occurrence," he said.
Colson explained that doors are locked from the outside to prevent unauthorized entry, but they're unlocked from the inside.
"We are not a lockdown facility," he said, explaining that similar facilities also have unlocked exits.
Facilities that are locked from the inside include some jails, prisons, mental health hospitals and care centers for people with dementia. They often include elaborate systems, such as video cameras and human monitors, to make sure people can escape in case of a fire, riot or other emergency.
"The children we serve are closely supervised by staff 24-7," Colson said.
A staff member can supervise up to six children at a time, but the Children's Home tries to have a lower ratio, Colson said. When Dennard ran away, it was a lower ratio of one staffer per two children.
"Once this crisis has passed, we will review our practices to be certain they are what they need to be, and that is our typical approach," Colson said.
Colson said investigators have interviewed the center's staff and students, and that he's incredibly thankful for the work of the Pennington County Sheriff's Office and all other agencies involved in searching for Dennard. They're "incredible folks," he said.
In addition to the staff and students, investigators also interviewed Dennard's family and people who live near the Children's Home, said Helene Duhamel, spokeswoman for the sheriff's office. More than 60 people were interviewed.
Deputies searched the Children's Home four times to make sure Dennard wasn't hiding inside, Duhamel said. After contacting neighbors, most allowed deputies to search their home three times. Missing person flyers were also distributed.
An estimated 235 people, plus dogs, searched for Dennard between Sunday and Tuesday, Duhamel said. On Sunday, about 35 people carrying thermal imaging devices and dogs were on hand. Sheriff Kevin Thom previously explained that it is best to start searches with a smaller group to make sure people don't trample trails and scents for the dogs. A plane couldn't fly Sunday due to snow and low fog, Duhamel said. On Monday, 90 people, dogs and a plane searched for Dennard. On Tuesday, dogs and 110 people searched.
Duhamel said while searches focused on a one-mile radius on Tuesday, "a much wider area" was searched throughout the three days, including locations out to Highway 16 and 40. She said drones weren't used because after the Civil Air Patrol plane flew in the area, officials didn't think drones would help because of the snow cover.
Deputies continue to investigate and remain at the Children's Home, but no active search was happened on Wednesday. Duhamel said people and dogs, including some that specialize in finding dead bodies, will search on Saturday and Sunday.
Colson said he hopes Dennard found a warm place to hide or was picked up by someone with good intentions.