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Old lawsuits reveal how Erickson allegedly tricked investors

Old lawsuits reveal how Erickson allegedly tricked investors

Big promises, friendly letters among tactics of accused SD fraudster tied to Russian agent


Although the individual victims of South Dakotan Paul Erickson are identified only by initials in a wire-fraud and money-laundering indictment against him this week, some of his spurned investors — including at least a couple of high-profile politicos — can be publicly identified because of their past attempts to claw money back from him.

Those spurned investors include L. Brent Bozell III, a media critic and commentator for Fox News who once invested $200,000 with Erickson, and Steve Kirby, a Republican former lieutenant governor of South Dakota whose private-equity firm won a judgment of $115,417 after Erickson failed to pay back a loan.

Lawsuits filed by Bozell and some less-well-known investors in Erickson’s various business schemes have shown how Erickson repeatedly used the same tactics — including a letter that he altered little from one scheme to the next — to allegedly dupe people into investing sums as large as $200,000 in reportedly bogus ventures.

Erickson, 57, of Sioux Falls, was indicted Tuesday and arrested Wednesday for one count of wire fraud and 10 counts of money laundering. He is on conditional release after posting an undisclosed amount of bond, and is awaiting further court proceedings.

Before Erickson was indicted, he had been in the news for several months following the July arrest of his Russian girlfriend, 30-year-old Maria Butina, who pleaded guilty in December in Washington, D.C., to serving as an unregistered foreign agent for Russia. With the help of a person identified by prosecutors in that case as U.S. Person 1 — Erickson — Butina coordinated with a Russian official to conduct an influence campaign in the United States targeting organizations including the National Rifle Association. She is currently awaiting sentencing.

And before Erickson became involved with Butina, he had popped up in the news periodically over the past 40 years for, among other things, his stints as an entertainment agent for infamous penile detachment victim John Wayne Bobbitt, as a top staffer in a Pat Buchanan presidential campaign, and as a lobbyist for an African dictator. Erickson grew up in Vermillion.

Court documents and statements made by lawyers in the Butina case indicated that she may have been cooperating with the investigation into Erickson’s alleged wire fraud and money laundering in South Dakota. BuzzFeed has reported that Wells Fargo’s anti-money laundering team began checking Butina’s and Erickson’s bank activity in early 2017, after receiving a referral from the FBI.

The wire fraud count against Erickson is based on a list of 22 transactions, consisting of check deposits and money wires, that Erickson allegedly received while carrying out his fraudulent schemes. The transactions range from $2,000 to $300,000 and add up to approximately $1.2 million. The 10 counts of money laundering are based on 10 money payments totaling approximately $188,000 that Erickson allegedly made to individuals or entities, using proceeds from his alleged fraud.

The indictment says he induced people to invest in Compass Care Inc., which he described as a project to build and manage assisted living centers; Investing with Dignity LLC, which he pitched as an effort to build specialized wheelchairs; and an unnamed venture to develop real estate in the Bakken oilfield in North Dakota.

The indictment reveals little else about the schemes, but past lawsuits against Erickson and his companies shed light on his alleged activities.

Bozell’s lawsuit, filed in 2007 in federal court in Virginia, said he had conversations and correspondence with Erickson about Compass Care beginning in 2006. Bozell alleged that Erickson claimed to have produced returns of 50 percent to 100 percent for other investors within one year of their investment.

In court documents, Bozell quoted from a letter he had received from Erickson.

“When compiling a ‘friends & family’ list for these types of transactions, it’s VERY important to me that these people remain friends and family,” said the quoted portion of the letter. “Toward that end, I insist upon extending a personal guarantee of whatever amount people on these lists choose to put into play. I won’t guarantee your potential profit, but I can assure you that unforeseen circumstances won’t rob you of the principal put into play.”

Bozell gave Erickson $200,000 in February 2006, the lawsuit said. By September 2007, having received no returns, Bozell demanded immediate repayment of the $200,000, according to his lawsuit. Bozell alleged that Erickson then personally delivered a check for $200,000, and the check bounced.

Bozell sued for breach of contract and won a $190,000 judgment in 2008, but it’s unclear if his attempts to collect the money ever succeeded. He tried to garnish pay from the American Conservative Union Foundation to Erickson, but the foundation, which had listed Erickson as a board member, filed a court document saying Erickson “was not and is not” an employee or creditor of the foundation.

As late as 2012, court records showed that Bozell attempted to have a U.S. marshal serve a writ of execution on Erickson to collect the money, but the writ was returned unexecuted and no further documents appeared in the court file. The Journal’s inquiries to a spokesman for Bozell went unanswered.

In 2015, a lawsuit that echoed many of the Bozell allegations was filed in South Dakota circuit court by the father-son developer team of Dennis and Daniel Bielfeldt, of Brookings.

The Bielfeldts alleged they had been persuaded by Erickson in 2009 to invest a combined $30,000 in a company called Dignity Medical Inc., which Erickson allegedly presented as a medical products company.

The Bielfeldts’ lawsuit said Erickson had told them to expect returns between 25 percent and 75 percent, and they produced copies of solicitation letters they had received from Erickson. One paragraph of the 2009 letters was nearly identical to the language Bozell had quoted from the letter he received in 2006.

“When compiling a ‘friends & family’ list for these types of transactions, it’s VERY important to me that these people remain friends and family,” said Erickson’s letters to the Bielfeldts. “Toward that end, I insist upon extending a personal guarantee of whatever amount people on these lists choose to put into play (up to $100,000). I won’t guarantee your potential profit, but I can assure you that unforeseen circumstances won’t rob you of the principal invested.”

In their lawsuit, the Bielfeldts claimed no corporation known as Dignity Medical Inc. had ever existed. They sued for deceit, fraud and breach of contract. While the lawsuit was in progress, Erickson’s first and second attorneys both withdrew. The first attorney revealed in a court document that Erickson wrote him a bad check, and the second said Erickson had failed to fulfill his obligations to the attorney's firm.

The Bielfeldts reached a $30,000 settlement agreement with Erickson in May 2016, but after he paid them $10,000, the Bielfeldts reported that Erickson's subsequent checks bounced. The Bielfeldts finally won a $40,874 judgment against Erickson in January 2017, and court records indicated last year that the judgment was still active.

Daniel Bielfeldt told the Journal approximately one year ago that he had since talked to a number of people who suffered similar experiences with Erickson.

"Early on, I thought he was one of the most impressive people I've met," Bielfeldt said. "He's an incredible speaker. He has an aura about him that engenders confidence in those around him. I asked him early on to be my mentor in business, so it was really hard realizing you've mostly been lied to."

Another significant judgment against Erickson, for $115,417, was won in 2003 by Bluestem, the private-equity firm of Kirby, the Republican former lieutenant governor of South Dakota. Court documents show Bluestem had lent Erickson money for Compass Care that he failed to pay back in time. It's unclear from the court record whether Erickson ever paid the judgment, and Kirby did not return messages from the Journal.

All through his years of allegedly fraudulent activity, Erickson portrayed himself as a successful businessman. As late as January and February of 2018, when the Journal interviewed Erickson several times by phone, he said he’d enjoyed a long run of entrepreneurial success, but he declined to provide any specific examples.

“I’ve enjoyed 33 years of wildly diverse business ventures all around the world in industries ranging from hotels to housing to entertainment to energy,” he said back then (he has not returned the Journal’s messages since that time).

Meanwhile, the Journal had obtained public records of seven court judgments totaling $421,212 against Erickson or his companies since 2003. One was a judgment of approximately $37,000 for unpaid credit-card debt owed to American Express. The company won the judgment in 2016, during Erickson’s relationship with Butina, which reportedly started as early as 2013.

Contact Seth Tupper at

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