Payback Deadline Missed, Former Grafton Stockbroker Faces Sentencing on Felony CountsA former stockbroker in Grafton, N.D., and Grand Forks did not come up with restitution to former clients of $2.1 million by the court-set deadline Tuesday, so he will be sentenced in March to prison for illegally selling securities.
By: Stephen J. Lee, Grand Forks Herald
A former stockbroker in Grafton, N.D., and Grand Forks did not come up with restitution to former clients of $2.1 million by the court-set deadline Tuesday, so he will be sentenced in March to prison for illegally selling securities.
Ross Haugen, 59, pleaded guilty Jan. 9 to seven felony counts in state district court in Grafton, each count carrying a top sentence of 10 years in prison, to taking $2.5 million in fake investments from six clients.
In a plea deal, he promised to pay back by Tuesday the remaining $2.1 million he admitted illegally taking from his former clients in 2006 and 2007. In return, Walsh County State’s Attorney Barbara Whelan said she would ask for no prison time.
Haugen earlier had paid back some of the $2.5 million to some of the six victims.
But according to Whelan’s office today, by the Tuesday deadline Haugen put no money in the trust fund set up for that purpose.
That means state District Judge Laurie Fontaine will sentence Haugen March 13. Whelan has made clear she will ask for serious time behind bars for Haugen.
Haugen was forced by state and federal authorities to surrender his securities licenses about a decade ago and was separately fined about $2.5 million by the federal Securities Exchange Commission for his key role in a wider scheme- known by its Coadum name - peddling more than $30 million in phony securities to more than 150 clients across the United States and Canada, including the clients in and around Grafton.
Much of the money was stashed in overseas bank accounts, including in Switzerland and Malta and spent by Haugen and two of his confederates now serving federal prison sentences for their parts in the scheme, according to federal officials and Whelan. A federal receiver has been working for years to find and recover the funds.
Haugen lived and worked as a stockbroker in Grafton in the 1980s and Grand Forks in the 1990s. He’s been fighting more than 50 charges Whelan initially filed against him nearly three years ago. He already had pleaded guilty to several felony counts and paid $185,000 in restitution to settle previous cases.
According to his attorney, Steve Meshbesher, Haugen has lost “everything” including two homes and other possessions and has been living with his wife in the basement of their daughter’s home in the Twin Cities.
As part of his probation from previous convictions he cannot work as a financial adviser.
Whelan says Haugen continually persuaded elderly clients, often using church connections, to invest in phony schemes, promising them big returns in what was a Ponzi scheme with some money from newer investors paid to previous investors.
Her prosecution of Haugen is the only criminal case against him. North Dakota securities officials assisted in the investigation.