March 11, 2015 at 4:52 p.m.
Maulson sentenced to prison in securities case
Maulson sentenced to prison in securities case
Kevin D. Maulson, 53, was sentenced to one year in prison and five years extended supervision on two counts of theft in a business setting and a single count of making false statement in a securities sale, all felonies.
Maulson entered no contest pleas to the felonies in 2010 as part of a plea agreement.
In exchange for the pleas, 11 other securities-related felony charges, including racketeering, were dismissed but read into the record for sentencing purposes.
Under the terms of the agreement, Vilas County Circuit Court Judge Neal Nielson accepted Maulson's pleas, but did not enter judgment.
According to the criminal complaint, 10 individuals or businesses invested more than $1.2 million in Maulson's company AmeriCash Inc., 2790 Thorofare Road, Lac du Flambeau, but were never repaid. The company contracted with Native American tribes in several states to install and operate ATMs in casinos in return for a percentage of the transaction fee each time a customer would use the machines.
According to the complaint, money from the AmeriCash Union Bank of California account was used to pay for the expenses of Maulson's other enterprises including Maulson Incorporated, Rolling Thunder Speedway, AmeriCash (F&M Bank), North American Fireworks, Resource International, Bank of America/Kevin Maulson, Native American Cash Systems, Fireside Restaurant and Now Cash LTD.
After funds were disbursed into other accounts over which Maulson had control, they included multiple other expenses, the complaint said.
Maulson was ordered to pay restitution to the victims totaling $1,264,918. He was to make equal payments over a 10-year period. If all of the restitution payments were made on schedule, the case would have been dismissed. That did not happen. Maulson's failure to make payments resulted in special prosecutor Martin Lipske of Iron County moving to have Maulson sentenced on the three charges.
In the end, it was the amount of the annual payments, $126,492 each, which proved to be Maulson's undoing, as he was unable to make any of them on time.
According to court testimony, Maulson sold his house on Fence Lake and all of his personal belongings but could not keep up with the payments. According to a motion to enter judgment granted by Nielsen on Dec. 15, Maulson owed $320,403 in payments dating back to 2012.
At the motion hearing in December, Nielsen ordered a presentence investigation (PSI) be conducted. Presentence investigations are completed by the Department of Corrections and offer sentencing judges background information on defendants.
Lipske called Judy Lehman, the author of the Maulson pre-sentence investigation, to testify during the sentencing hearing. In her report, Lehman recommended a period of probation with conditional jail time rather than a prison term.
Lipske asked if the Compass Assessment Test, which is a component of the PSI process, took into account the amount of money that was missing as well as Maulson's other debts.
"A reading of the headnote of the Compass Evaluation itself, it speaks more to whether or not Mr. Maulson will reoffend in the future, rather than really looking at what had happened in the past," Lipske said. "Is that a safe statement?"
"It does consider criminal history," Lehman replied. "But much of what you are speaking about is not criminal in nature. So it would not consider that."
Lipske then asked Lehman if she would make the same recommendation in a case involving a defendant who stole a lesser amount, say $25,000.
"The assessment itself does not," she said. "But my (sentencing) recommendation did take that into account, to a certain extent."
Under cross-examination by Maulson's attorney, Steve Lucareli, Lehman said her report and recommendation were reviewed by her immediate supervisor and the regional chief of the Department of Corrections.
Under redirect questioning Lipske asked Lehman if she ever saw Maulson express remorse.
"I did not," she replied.
Charles LaPorte was the only victim called to testify by Lipske. He explained how Maulson and AmeriCash's president Bradley G. Trapp convinced him to invest in the business.
He said the money he invested was to be used as "vault cash" or the money physically placed in the ATMs.
"Was it explained that this was a type of business where you could lose your money," Lipske asked.
"No," LaPorte replied.
LaPorte testified that he received the promised payments totaling $5,000 to $8,000 for six months or so before they stopped. By that time he had invested $150,000 in AmeriCash. He was told several times by both Trapp and Maulson that he would get his investment back but he never did. He eventually filed a civil lawsuit against Maulson and secured a judgment for $450,000, but he told Lipske that he hasn't seen a single payment. Other than a $50,000 restitution payment in 2011, LaPorte said he has received no funds from Maulson.
LaPorte told Lucareli he has known Trapp since his youth and had a "long-standing friendship" with him. He also said that he had a lawyer review the investment agreement he signed with Trapp and Maulson, but couldn't remember what he was told.
Trapp was never charged for his part in the failure of AmeriCash. In fact, shortly before he stepped down as president of the company, he obtained copies of the company's check ledger which he provided to investigators that showed the diversion of funds to Maulson's other enterprises. The statute of limitations has since expired and Trapp cannot be charged for any crimes for the investments, which occurred between May 1999 and September 2004.
LaPorte admitted that he had lost money in the most recent downturn of the stock market.
"As an investor in the stock market, did you understand that you could lose your investment," Lucareli asked LaPorte?
"Yes," LaPorte replied, but added that he was led to believe that the AmeriCash investment was not a stock purchase.
He told the judge that the victims have been trying for many years to get restitution and many have given up hope of ever being "made whole" again. The victims have had to force Maulson to make payments every step of the way, he added.
"Unfortunately, it has come to this," LaPorte said. "I'd rather have the money, but if I'm can't get the money, he (Maulson) needs to go to jail."
Lucareli then called Tom Maulson, former chairman of the Lac du Flambeau Tribe, to testify as to his son's character.
If the case had proceeded to trial, the outcome would have been different, Maulson. He added that Trapp should have also been charged, along with his son.
"I don't see Brad here," Tom Maulson said. "Presidents take the hits for these things, also."
He testified that his son did not know many of the victims and never would have come into contact with them if not for Trapp.
"Mr. Brad Trapp was the one who talked first to Mr. LaPorte," Tom Maulson said. "I like Brad, don't get me wrong. But what took place here was just a shock in Indian Country and I can't believe that my son was a part of that."
Maulson said his son has repeatedly told people that he will do whatever it takes to pay the restitution.
"Did he kill anybody? Hell no, he didn't kill anybody," Tom Maulson said.
After a brief recess, Lucareli called Jessica Greenfield to testify as to Maulson's character. She told Nielsen that she has known Maulson since 2007 when he befriended her son. She testified he told her that he was not going to shirk his responsibility to pay restitution, but "the odds were stacked against him" trying to find work in the Indian Gaming Community.
"You hear that he wasn't remorseful, but we saw a different side of him," Greenfield said.
She also said that while Maulson was the type of businessman who saw the "idea" for a service such as AmeriCash, he didn't have the feel for the details to make a business a reality. For that, he needed Trapp's expertise, she said.
Lipske argued prison is in order.
While the PSI sentence recommendation states Maulson was "naive and Ignorant" when it came to running the business, Lipske had a different take.
"I have two words for 'naïve and ignorant' and they are cunning and arrogant," he said, noting Maulson set up the business with Trapp as the president to shield his finances from the civil judgments against him and the investors.
"If you follow the money, it went to Kevin Maulson," Lipske said.
He then asked Nielsen to impose a total of 10 years in jail and 10 years of extended supervision on the three charges.
Lucareli said Maulson ceded much of the day-to-day operations of the company to Trapp when he came on board. Before Trapp joined the company, AmeriCash was a profitable business, generating $2 million a year, he said.
"Kevin himself will tell you he was playing a bit of golf when he should have been watching where the money was going," Lucareli said.
Lucareli argued there is no way to look at this case and not see that Trapp should have been held at least as culpable as Maulson.
"I don't know if a deal was cut or not but I know he didn't get charged," Lucareli said, adding that his client can afford to pay only $1,000 a month in restitution payments based on his present income level. He asked that Nielsen sentence Maulson to probation with conditional jail time to continue working to make restitution to the victims.
"If you follow Mr. Lipske's recommendation, you eliminate, for all practical purposes, any chance of getting the victims' money back," he said.
After a recess for lunch, Nielsen prepared to pronounce sentence. He said he reviewed every document in the rather large file, and unlike in many cases, did not come into court with a preconceived idea of how he was going to rule.
He discussed the rather "amateurish agreement" the victims signed when they made their investments as the first clue that this was not a sophisticated attempt to defraud the investors. He said nowhere in the agreement was the promised return spelled out.
"Everyone heard what they wanted to hear," Nielsen said.
By the time Trapp became involved with AmeriCash, it was already a troubled business, he added.
"Ultimately, a day comes when income from transactions is insufficient to cover the continued cost of doing business," he said.
Unlike other investment scandals, such as the Ponzi scheme operated by former New York City financier Bernie Madoff, he said the investors in the AmeriCash are guilty of "criminal stupidity."
He added that accepting the deferred entry of judgment agreement was "strategic" on Maulson's part, giving him time to hopefully find a way to repay the victims and have the charges dismissed.
"I think we can all acknowledge it was a gamble," Nielsen said.
He said the PSI recommendation of probation to give Maulson more time to make restitution was also a gamble as it would give him even less time to make the payments. By law, the longest period Nielsen could impose was eight years of probation, and even that would not be a realistic period of time, he said.
He also noted Maulson's age and indicated Lipske's recommendation was harsh.
"We are throwing any chances that restitution would be made out the window," Nielsen said. "Those are pretty stark choices."
During the 90-minute afternoon session, Nielsen kept coming back to the amount of money the victims lost and that the "gravity of the offense" made simple jail time and probation unfair.
He also noted that Maulson would only make restitution payments when faced with having the deferred entry of judgment agreement revoked and sentence imposed.
"There was never a check for $1,000 or $2,000 because that is all that he could pay," Nielsen said. "That would have said a lot about his character."
In handing down his sentence, Nielsen offered Maulson an incentive to pay the restitution to the victims. Maulson may be released from extended supervision after two years if payment is made in full.
Maulson must report to the Vilas County Jail by 4 p.m. March 20.
Jamie Taylor may be reached at [email protected].
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