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Financial Crime: $30 million in missing gold bars, a couple on the lam from the FBI and a corgi nicknamed ‘Nugget’: the inside story of a precious metal Ponzi scheme

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A precious metals dealer who recently went on the lam after being convicted in a $30 million Ponzi scheme involving gold and silver bars, has been sentenced to 11 years in federal prison.

Bernard Ross Hansen, 61, and his vault manager and girlfriend, Diane Renee Erdmann, 49, were found guilty by a federal jury in July 2021 of defrauding over 3,000, mostly-elderly customers out of more than $30 million in a gold and silver bullion investment scheme. 

The pair failed to show up for their original sentencing hearing in April and went on the lam for 11 days before being caught by Federal Bureau of Investigation agents at a motel north of Seattle with three loaded handguns, boxes of collectible coins and a pet corgi nicknamed “Nugget” in their car, authorities said.

“Every day he was on the run was one more free day,” investigators say Hansen told them after he was arrested, according to court filings. 

The couple finally faced the music on Monday, with Hansen receiving an 11-year sentence and Erdmann five years. Hansen was ordered to pay $33.7 million in restitution and Erdmann $32.1 million.

““The impact of this fraud goes beyond the significant dollar figure.” ”

— Nick Brown, U.S. attorney for the western district of Washington

The stolen money represented “victims’ plans and dreams: retirement, college funds, and inheritances,” said Nick Brown, the U.S. attorney in Seattle, Washington. 

“It is heartbreaking to hear how the fraud upended their lives and left them working longer, harder, and in deep stress to try to recover,” he said. The impact of this fraud goes beyond the significant dollar figure.”

Messages left with attorneys for Hansen weren’t immediately returned. Erdmann’s attorney, Benjamin Byers, said he was “disappointed by the outcome given the nature of her participation which even the judge characterized as a kind of Stockholm syndrome.”

Shuffling stockpiles

Prosecutors say Hansen, who was the  president and chief executive of the now-defunct Northwest Territorial Mint in Washington state, promised customers to deliver bars of the precious metals or to store them in the company’s vaults for safe keeping in exchange for a fee.

But they say Hansen and Erdmann routinely used the bars in the vault which belonged to their customers, to fulfill new orders. In other instances, they would delay shipment of gold and silver bars to prior customers until they had received cash from new investors, in a class Ponzi-type structure.   

The mint, which was founded in the 1980s and also produced commemorative coins, medals and badges, often would only have about a third of the gold and silver on hand that it actually owed its customers, according to court papers.

The scheme started to become unwound in 2016, when Hansen lost a $30 million defamation suit brought by his landlord for the mint facility, who he accused in internet posts of running a Bernie Madoff-scale Ponzi scheme. The ruling was reported at the time to be the largest defamation judgment ever involving online posts.

The judgment forced Hansen to declare bankruptcy and the scope of his fraud surfaced as the courts tried to settle the company’s debts. In 2018, he and Erdmann were charged with scheming to defraud their customers.

Repeat offender

It was not the first time Hansen had run into trouble with the law. In 1987, he was convicted of selling unregistered firearms and sentenced to 90 days in prison. Four years later, he was convicted of money laundering and financial reporting offenses similar to the more recent scam, and was sentenced to 30 months in federal prison.

As a result of the 1991 conviction, Hansen and Northwest Mint had agreed to operate under terms set out in a consent decree issued by the Washington State attorney general’s office. Testimony at trial revealed that the company routinely violated the terms of the agreement.

In court filings, Hansen’s attorneys argued that he had never operated the scam to enrich himself but to plug holes in a flawed business model that couldn’t keep up with customer demand. They pointed to the fact that he and Erdmann lived in a modest rental home and that he only owned a few pairs of pants and shirts. 

Erdmann’s attorneys argued that she had acted mostly at the direction of Hansen and had little contact with customers so had failed to appreciate the impact the thefts had had on them. They said she was deeply remorseful.

Prosecutors said that the couple’s decision to run rather than face sentencing proved that they were only interested in themselves. 

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