Founder Of Burnsville-based Company Indicted For Multi-year Investment Fraud Scheme
United States Attorney Andrew M. Luger today announced the indictment of BRYAN REICHEL, 59, founder and former principal shareholder of PureChoice, Inc. (PureChoice), on seven counts of Wire Fraud. REICHEL is charged with stealing more than $2.5 million in investment funds and loans from a variety of investors by lying about the intended use of the funds and failing to disclose the true status of the company’s products.
“Protecting the citizens of Minnesota from financial predators is one of my top priorities,” said U.S. Attorney Luger. “This office will continue working diligently to ensure that criminals who engage in investment fraud are held responsible for their actions.”
According to documents filed in court, from April 2007 until November 2009, REICHEL solicited investments and loans to PureChoice, a Burnsville-based company that sold air quality monitors. During the indicted period, REICHEL stole money from investors, primarily Victim A, by lying about the success of the company and not telling investors that PureChoice’s main product did not comply with federal regulations.
According to the indictment, in 2007, REICHEL sold Victim A $600,000 worth of PureChoice stock, falsely representing that the funds would be used for manufacturing and operational expenses. Instead, REICHEL used the funds to purchase stock in other companies and pay personal credit card debt.
According to the indictment, in May 2008 and July 2008, REICHEL asked Victim A to provide PureChoice with loans in the amount of $800,000 and $200,000, respectively, stating that the funds were needed to “bridge the gap” until the next round of funding was complete. Again, REICHEL used the majority of the funds for personal use, including the purchase of stock in other companies and paying off thousands of dollars in credit card debt.
As part of the scheme, REICHEL sent a sales and marketing update to PureChoice investors and prospective investors in which he allegedly lied about the company’s corporate agreement with 3M. In the update, REICHEL stated that PureChoice was “currently working to expand [its] existing relationship” with 3M, when, in reality, REICHEL had received notice from 3M of its intent to allow its agreements with PureChoice to expire. REICHEL also sent investors a company update that included a Government Services Administration publication that had been altered to appear as if it specifically referred to PureChoice and its products.
According to the indictment, in September 2009, REICHEL asked two victims to provide a $1.5 million loan to PureChoice to purchase manufacturing materials so the company could meet projected sales and hire additional staff. In order to secure the loan, REICHEL again misrepresented the company’s relationship with 3M and expressly stated that the funds would be used to purchase products from suppliers. Over the course of four transactions, REICHEL obtained a $1.5 million loan from Victim A, of which a significant portion was used to pay off earlier investors in PureChoice.
This case is being prosecuted by Assistant U.S. Attorneys Joseph H. Thompson and David J. MacLaughlin.
U.S. Attorney Luger thanked the United States Postal Inspection Service, Internal Revenue Service-Criminal Investigations, and Federal Bureau of Investigation for conducting the investigation.
Prior Lake, MN
• Wire Fraud, 7 counts
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.