MN Business Partners Accused Of $750K Fraud Scheme
Two Minnesota businessmen could face up to five years in prison for allegedly conspiring to defraud equipment-leasing and insurance companies out of about $750,000.
A federal indictment unsealed Thursday charges Joseph Michael Hanson, 54, of Mendota Heights, and Timothy John Lambrecht, 41, of Medina, with one count of conspiracy to commit mail and wire fraud, according to Minnesota’s U.S. Attorney’s Office.
Lambrecht owned and operated InCompass, Inc., a New Brighton-based business that provided IT services to third parties, according to the U.S. Attorney’s Office. Hanson, along with Lambrecht, owned HLI, LLC, which owned the New Brighton building in which InCompass operated. Lambrecht also owned and operated Trac Enterprises, which the U.S. Attorney’s Office alleges was a “shell” corporation that he used to perpetrate parts of this fraud scheme.
According to the U.S. Attorney’s Office, the indictment alleges that between December 2008 and May 2012, both Lambrecht and Hanson conspired with others to lease—or to cause third parties to lease—computer equipment at greatly inflated prices to create a pool of funds from which they paid their personal and business expenses.
The indictment also alleges that the two men submitted false claims to insurance companies, claiming certain equipment of theirs had been stolen.
The indictment includes an incident in 2008 in which Lambrecht allegedly had Trac Enterprises purchase a storage area network (SAN) device—a collection of computer storage devices that stores and protects data through a high-speed network connection—for $27,700. Lambrecht then allegedly sold the SAN to Wells Fargo Equipment Finance (WFEF) in February 2009 at the greatly inflated price of $112,300. WFEF then leased it to InCompass, and Lambrecht allegedly hid from WFEF that he owned both TRAC and InCompass.
According to the U.S. Attorney’s Office, Lambrecht also allegedly misled WFEF into paying for SAN training and consulting services, purportedly worth $28,750, which were never provided. In all, the indictment claims Lambrecht obtained more than $246,179 from WFEF, which he used to prop up InCompass and pay against a loan on the HLI Building.
In July 2010, Lambrecht allegedly reported to his insurance carrier that the SAN had been stolen from InCompass and filed a claim for reimbursement of more than $170,000 in replacement equipment and data recovery services. Lambrecht never purchased those replacements or services but received more than $498,000 from the insurance company between July 2010 and January 2011, during which InCompass continued its use of the SAN equipment, the U.S. Attorney’s Office said.
“There is no fraud here,” Lambrecht’s attorney Timothy Webb told Twin Cities Business on Tuesday. “The transactions and business dealings referenced in the indictment are between sophisticated business entities who are well equipped to assess the risks involved here. Risk means that sometimes business transactions do not perform as expected.”
Hanson’s attorney Manvir Atwal said Monday that because the indictment was just unsealed on Thursday, it was too soon for her to comment.
As a result of Lambrecht’s and Hanson’s entire alleged fraud conspiracy, WFEF lost at least $100,000 and the insurance companies lost about $658,000, the U.S. Attorney’s Office said.
If convicted, the defendants would face a potential maximum penalty of five years in prison.