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| Ponzi scheme preacher gets 15 years |
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| Wednesday, 22 October 2008 | |
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Cliff Buchan News Editor Neulan Midkiff, the Forest Lake man who was convicted in a multi-state, multi-million dollar fraud case, will spend the next 15 years in federal prison. Midkiff, 66, was handed the prison sentence Thursday morning by U.S. District Court Chief Michael J. Davis in federal court in Minneapolis. Midkiff will have 10 days to appeal the conviction and sentence. He remains in federal custody. On August 1, Midkiff, a one-time key figure in the Shiloh Church in Forest Lake, was found guilty of defrauding 519 people nationwide out of approximately $30 million in a Ponzi investment scheme. Midkiff was found guilty of eight counts of mail fraud, eight counts of wire fraud, one count of conspiracy to commit mail fraud, and four counts of failure to file tax returns. Midkiff was indicted in December 2006 in connection with the scheme. A second defendant named in the indictment, Atlanta resident Travis Correll, pleaded guilty in Georgia in connection with his participation in the scheme and was sent to prison for 12 years. A third defendant, Jerry Watkins of Forest Lake, pleaded guilty Jan. 9, 2007, to five criminal counts for his participation in the scheme. He testified against Midkiff during the trial. Court records indicate that from April 2004 through December 2005, Midkiff devised and intended to devise a scheme to defraud and to obtain money by means of materially false and fraudulent pretenses, and did knowingly cause to be sent by the U.S. Postal Service and interstate commercial carrier various mailings for the purpose of executing the scheme. It was part of the scheme to defraud that Midkiff fraudulently obtained money from individuals by falsely representing that the individuals’ money was being invested and that other investors were obtaining high rates of return on their investment, when in fact, he knew that the investment was not producing interest payments. In the spring of 2004, Midkiff and Watkins began soliciting investors using the name “Central Financial Services of Minnesota,” and promised a return on investment of 6-8 percent per month. In May of that year, Central Financial Services entered into an agreement to invest money they had collected from the investors with West Wing Financial. The agreement called for Midkiff and Watkins to provide West Wing $1 million, and in exchange, West Wing promised to pay a minimum of 8 percent interest per month for 14 months. “We believe today’s sentence was fair and appropriate,” said U.S. Attorney Frank J. Magill in a statement. “It sends a strong message that those who attempt to defraud others will be prosecuted. I want to thank our law enforcement partners - the IRS, the FBI and U.S. Postal Inspection Service - for their efforts in bringing a successful outcome to this case.” The sentence In addition to the 15 years in prison, Midkiff was ordered to pay $18.97 million in mandatory restitution to the victims of the fraudulent financial scheme. Judge Davis said he would recommend to the federal bureau of prisons that Midkiff be incarcerated in Rochester where the Federal Medical Center would be available to deal with Midkiff’s serious heart ailment. If Rochester is not assigned, Midkiff will likely serve his time in federal correctional facilities in Duluth or Sandstone which would keep him near family. The sentence was a departure from federal sentencing guidelines that could have sent Midkiff to jail for life. Comments from court Doug Olson, Midkiff’s public defender, argued for a reduced sentence in light of Midkiff’s health condition, age and the fact that Correll, the mastermind of the Ponzi scheme, had been sentenced to 12 years in prison. While the prosecution argued in the case that Midkiff used his position as a minister and a man of the cloth to draw in investors, Olson argued there was more to the story. Most investors were more interested in the 7 percent monthly return on their investment, he said. “It wasn’t because he was a preacher,” Olson said. In his allowed time for remarks to the court, a tearful Midkiff apologized to the court and the victims of his actions. More than 30 friends and family members, some openly sobbing, listened from the audience, as did a handful of the victims. “Yes, I made some stupid decisions,” Midkiff said, point to a “moment of vanity.” He asked those he wronged to forgive him. “I am so sorry for the church,” he said. “I’m not angry because they are angry. I ask them to forgive me. I’ll never live this down.” Midkiff said it was never his intent to defraud anyone. He blamed Watkins for the crimes tied to the $1 million payment to West Wing in 2004. Midkiff said he was out of the country at the time of the payment. “That was not my program,” he said. “I thought I was helping a friend,” he said of Watkins who lived with Midkiff after returning to Minnesota from Israel in 2001. “It’s not how I spent my life,” he said. Olson, too, said Midkiff’s conviction was not emblematic of the life Midkiff has led helping people. He described it as a “life of good deeds.” Judge speaks In handing down the sentence last week, Judge Davis expressed some empathy for Midkiff, but not to the degree sought by Olson. Davis discounted the defense claims that Midkiff was not a good businessman. “You knew that the money was not going to Europe,” Davis said. During his involvement in the financial scheme, Davis said Midkiff was able to go from living in a trailer home to a $1.3 million lake home in Forest Lake. “That’s someone who is not a bad businessperson,” the judge said. Judge Davis also had criticism and questions for Timothy Rank, the assistant U.S. Attorney who prosecuted the case. Davis questioned the contrasts between the cases in Atlanta and Minneapolis. Is the U.S. Justice Department out of control, Davis asked? “I disagreed with the sentencing,” Rank said of the Correll decision that came after Correll entered a guilty plea to avoid a trial. That was not the case with Midkiff, he said, pointing to the fact that in trial more details come to the surface that impact the final sentence. Rank countered that while there were connections between the two cases, the Midkiff case was separate from Correll. He said Midkiff used his position of authority with the church and was smart enough to skirt an earlier Minnesota Department of Commerce probe, hire people as his agents and move the company to Nevada. If Midkiff had been truly interested in preventing fraud, he could have come forward during the commerce probe in 2003, Rank said. “Maybe none of this would have happened,” Rank said. Judge Davis on multiple occasions on October 16 drew parallels to white collar crimes of schemes like Midkiff’s to the much larger Enron and World Com frauds. While the level of the crimes varied wildly, the level of punishment did not have a wide gap, the judge said. “The more you steal, the better off you are,” Davis said, adding that many large corporations are “getting away with murder. Social Bookmarking ...       |
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