Cry Me A River

Kevin D. Wanner bilked 66 clients, including his wife, family friends and other relatives, for more than $3 million invested in bogus CDs and funds before his 15-year scam fell apart. His scheme is one of the largest Ponzi crimes in North Dakota’s history.

He pleaded guilty to money laundering and fraud, but the sentencing hearings included emotional testimony by victims and the defendant. Wanner broke down several times, apologizing to his onetime clients and citing a gambling addiction as the reason for his conduct.

Prosecutors ultimately secured a punishment in line with their recommendation in a rare white collar case with a double-digit sentence, according to Assistant U.S. Attorney Nicholas Chase. The victims’ testimony described the loss of their hard-earned savings, he says.

“None of these victims were high rollers. They had all lived the American dream as it was preached to all of us,” says Chase, adding that they had been “cutting their expenses everywhere trying to save money for their later years. By and large, most of the investors were looking for CDs and bonds. They weren’t looking for risky investments.”

Between 2001 and 2015, Wanner co-mingled his clients’ funds between his personal and business accounts after selling them on bogus investments and a “fraudulent investment club” he called the Bulls and Bears Investment Club, according to an affidavit filed in the case by state securities regulators.

The victims’ filings, as well as U.S. District Judge Daniel Hovland’s statement on the reasons for the sentencing, have been shielded from public view, Chase says, because they contain victims’ personal information. A reporter from the Associated Press attended the sentencing proceedings, however.

Wanner stood at the front of a packed courtroom and addressed the victims, crying uncontrollably at some points, according to the AP report. Mark Wanner, who isn’t a family member, discussed how the scam extracted a great toll on his elderly father.

“You were a piranha in a goldfish tank,” Mark Wanner told the former advisor, the AP report said. Hovland sided with prosecutors’ request of 11 years and three months in prison, to be served in a low-security facility near Wanner’s home.

“It's a long time, but there are a lot of victims that have been suffering for 15 years as well, and they're going to continue to suffer," Hovland said in court.

As part of his eventual supervised release, Wanner must undergo mental health counseling, avoid casinos and any form of gambling and pay restitution. Hovland set a Sept. 21 date to hear arguments on restitution and possible asset forfeiture, which could include Wanner’s Ford Mustang convertible.

Additional restitution could include more than $229,000 in unpaid principal for 44 victims, plus up to hundreds of thousands of dollars more, depending on how interest is calculated, according to a prosecution filing. Questar and Woodbury may also receive some repayments.

The fact that Woodbury and Questar “had nothing to do with, and did not approve of” the scheme was not under dispute, a prosecution memo said.

Woodbury, which cited a company policy against discussing the circumstances of legal matters in declining to comment on Wanner’s guilty plea earlier this year, did not respond to a request for comment on the sentencing. Questar spokesman Brett Weinberg praised the outcome of the case.

“The firm terminated Mr. Wanner after discovery of his wrongdoing in 2015,” Weinberg said in an emailed statement. “We are pleased to see that justice has been served.”

 

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