BISMARCK — Hunter Hanson, the 22-year-old northeast North Dakota grain trader from Leeds, N.D., who investigators say ran his business like a Ponzi scheme in 2018, has agreed to plead guilty to federal wire fraud and money laundering.
First U.S. Attorney Nick Chase in Fargo on Monday, June 17, revealed information in an unsealed plea agreement that Hanson recently signed, indicating his intent to plead guilty to the charges. The case will be handled in U.S. District Court in Bismarck.
Assistant United States Attorney Jonathan O'Konek said Hanson's arraignment will occur June 18 at 11 a.m. at the federal courthouse in Bismarck, and his change of plea will occur on July 30, 2019, at 9:15 a.m., also in Bismarck.
Under the terms of the federal agreement, Hanson will plead guilty to wire fraud and money laundering and will agree to forfeit "his assets, which are proceeds of the aforementioned crimes."
The federal case will take precedence over county criminal charges that had been filed separately in McLean, Sheridan, Mountrail and Williams counties.
ADVERTISEMENT
Hanson has agreed to pay "full restitution in the amount of $11,405,134.72," according to a press release. Prosecutors will recommend a sentence within the applicable sentencing guideline range and recommend that he serve a three-year period of supervised release.
As part of the deal, the government won't charge him with additional federal economic crimes related to his charged scheme to defraud grain customers.
The federal plea agreement states that from January 2018 to December 2018, Hanson "executed a scheme to defraud approximately 60 farmers, elevator, or commodity brokers in North Dakota, Minnesota and Canada." Hanson dealt in trades of yellow peas, durum wheat and other specialty crops.
Hanson first operated Midwest Grain Trading under a state roving grain buyer's license provided through the North Dakota Public Service Commission. Later he added a second company name — NoDak Grain — a warehouse company with locations at villages of Tunbridge, N.D., in Pierce County, and Rohrville, N.D., northeast of Devils Lake, N.D., where he established offices.
About 60 farmers, elevators or brokers suffered a total financial loss of about $11.4 million, as reported in claims to the PSC, which issued a cease-and-desist order in November. Since then, Hanson has been arrested on the McLean County charges and remains in jail there after failing to get a judge to reduce his bond from $50,000.
'Intent to defraud'
According to the federal news release, Hanson, "with intent to defraud, contracted with multiple farmers and grain elevators to obtain grain or other agricultural commodities, obtained these commodities, and either failed to pay the farmers and elevators for these commodities or sent these farmers and elevators non-sufficient funds checks."
As part of this scheme to defraud, Hanson "maintained multiple bank accounts, engaged in check kiting to cover his deposits and withdrawals, laundered money between his bank accounts and other businesses, and often did not have sufficient funds in his bank accounts when he remitted payments to farmers and elevators for money owed on the agricultural commodities purchasing contracts.
Moreover, Hanson diverted funds from his grain business accounts to other personal and business accounts.
ADVERTISEMENT
"Additionally, Hanson purchased agricultural commodities from farmers and elevators above their per bushel market value and then sold these same commodities below their per bushel market value."
False security
Finally, after Hanson failed to pay farmers and elevators for the agricultural commodities, Chase said he sent emails "to lull farmers, elevators, or brokers into a false sense of security, to postpone inquiries, or to make his transactions between the farmers, elevators, or brokers less suspect."
Much of the information is similar to information filed in South Central District Court in McLean County, where Hanson was scheduled to have a hearing on theft charges on Wednesday. O'Konek credited the "diligent efforts of state, local, and federal law enforcement" and said Hanson "will be held accountable for his actions." He emphasized that until there is a conviction in this case, Hanson is presumed innocent.
O'Konek credited the Federal Bureau of Investigation, the North Dakota Bureau of Criminal Investigations, the North Dakota State and Local Intelligence Center, and the McLean and Mountrail County sheriff and states attorney's offices.
