Defendant Pleads Guilty To Defrauding Investors For More Than $19 Million In Small Appliance Resale Scheme
United States Attorney Andrew M. Luger today announced the guilty plea of TYRONE HERMAN, 55, of St. Anthony, Minn., for defrauding investors for more than $19 million. HERMAN, who was charged by information on September 9, 2014, pleaded guilty today before Untied States District Judge Joan N. Ericksen.
“Investment fraud takes all forms – even sophisticated investors can be victims,” said U.S. Attorney Luger. “Working closely with our colleagues from the Minnesota Department of Commerce and the Federal Bureau of Investigation, today we are protecting more people than ever before, by removing from the market place those who are stealing clients’ money by investment fraud.”
Minnesota Department of Commerce Commissioner Mike Rothman said: “We will continue to fight investment fraud and criminal Ponzi schemes. After a concerned citizen gave a tip to our securities investigators, our agents from the Commerce Fraud Bureau and the FBI collaborated to investigate and stop Mr. Herman from committing any more criminal financial abuse.”
Special Agent in Charge of the Federal Bureau of Investigation Minneapolis Division Richard Thornton said: “The FBI remains steadfast in its commitment to prevent financial fraud. This guilty plea serves as a reminder to those who commit financial fraud that no safe harbor exists.”
According to his guilty plea and documents filed in court, HERMAN, from 1998 through December 2013, operated Executive Marketing Group (EMG) and Ty Herman & Associates, which he claimed had business relationships with manufacturers and wholesalers from whom he could purchase small appliances and other inventory at below-retail market rates. HERMAN told the victims that he could re-sell the inventory in which they invested for a profit of 35 percent, and that victims would receive their money back, with a 30 percent rate of return, within 90 days of the sale of inventory.
According to his guilty plea and documents filed in court, HERMAN created false invoices to demonstrate to victims that had sold the inventory. When they demanded return of their investments, HERMAN provided fake bank statements showing that, while he had the money in his bank account, the Internal Revenue Service had frozen the account so that he could not access the victims’ money. HERMAN repaid some investors with Ponzi-type payments, not from the sale of inventory.
According to HERMAN’S guilty plea and documents filed in court, he stole more than $19 million from at least 25 separate victims.
This case is the result of an investigation conducted by the Minnesota Department of Commerce and the Federal Bureau of Investigation.
Assistant U.S. Attorney Karen Schommer prosecuted the case.
TYRONE R. HERMAN, 55
St. Anthony, Minn.
• Wire Fraud, 1 count