NORTH DAKOTA (USA): FORMER GRAIN TRADER (Hunter Hanson) PLEADS GUILTY TO $11M wire fraud + money laundering scheme
Hunter Hanson (mugshot)
BISMARCK — Hunter Hanson told U.S. District Judge Daniel Hovland he “got overwhelmed” in his grain trading business, leading to a situation in which he defrauded at least 60 farmers, grain elevators and grain brokers in North Dakota, Minnesota and Canada for more than $11 million.
Hanson, 22, on Tuesday, July 30, at the William L. Guy Federal Building pleaded guilty to federal charges of wire fraud and money laundering. While each charge carries a maximum penalty of 20 years in prison, Assistant U.S. Attorney Jonathan O’Konek said the federal sentencing guideline range in the case calls for a sentence of 78 to 97 months, six and a half to just over eight years in prison. Hanson also agreed to pay restitution in the amount of $11,405,134.72.
The plea agreement says the scope of the case against Hanson greatly increased the sentencing guideline range, with significant enhancements because of the total loss being more than $9 million and the number of victims being more than 10. Hanson’s sentencing is scheduled for 10 a.m. Nov. 12.
Hanson will remain out of custody pending sentencing. O’Konek agreed with a recommendation from a federal probation officer to remove location monitoring as a condition of Hanson’s release as Hanson “has done well on supervision.”
O’Konek also said Hanson met with federal officials to show them real property in the Leeds area that will be forfeited to go toward restitution.
Hanson in 2018 operated several businesses, including Midwest Grain Trading, a roving grain buyer, and NoDak Grain, a warehouse company. The North Dakota Public Service Commission in November 2018 issued a cease and desist order against Hanson after receiving reports of bounced checks from farmers and elevators.
The wire charge in the case refers to an Oct. 25, 2018, incident in which a representative of Shafer Commodities in Morden, Manitoba, emailed Hanson to inform him the company had not received an expected wire transfer. Hanson responded, also via email, that his bank had informed him he used the wrong banking account information and that he would resend the money right away. However, documents say that was a lie; Hanson did not send the transfer in the first place and “used wire communications, in the form of email communications, to lull farmers and elevators into a false sense of security.” Shafer Commodities was among the first entities to alert the PSC to Hanson’s businesses.
The money laundering charge is in relation to Hanson’s pattern of moving money among 11 business bank accounts as well as personal accounts, employing a practice known as “check kiting,” where someone will write a check with insufficient funds then deposit a check from another account into the first account.
O’Konek called it a “quasi-Ponzi scheme,” explaining how Hanson would buy grain at a premium, sell it at a lower price and use the funds from the sales for personal use or to invest in Hanson Motors, a used car dealership Hanson and a partner started in Belcourt.
“And at a certain point in the scheme, everything kind of fell through the cracks,” O’Konek said.
Hanson answered Hovland’s questions throughout the hearing, which lasted less than an hour. He told the judge he grew up in Sheyenne, all of his family lives in North Dakota and he has no problems with alcohol, drugs or mental health. Hanson said he was an “average, I’d say” student at New Rockford High School and never was in trouble with the law prior to this case.
“How do you get caught up in a scheme of this magnitude?” the judge asked.
Hanson said his inexperience caught up with him, and he became overwhelmed.
“I just got too big too fast, and it started going south,” Hanson said.
He never was indicted by a federal grand jury but agreed to plead guilty to federal charges filed by complaint. According to the plea agreement Hanson signed on May 31, prosecutors will recommend a sentence within federal sentencing guidelines and will agree not to charge or indict Hanson on any other counts related to the scheme.
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