Former area businessman Mark S. Haukedahl, indicted Wednesday on conspiracy charges for an $11.7 million nationwide insurance scam, was arraigned yesterday in U.S. District Court in Toledo.
Mr. Haukedahl, 60, pleaded not guilty to money laundering, mail and wire fraud, and tax evasion charges and was told that he will spend at least three more weeks in jail.
A resident of the Dominican Republic since 2003, he was arrested Sunday by FBI agents after he stepped off a plane at Cleveland Hopkins International Airport.
Three days later, he was accused in an eight-count indictment of defrauding 4,500 real estate agents and appraisers in an insurance scheme and laundering more than $1.3 million through the business into banks accounts in Chicago and the Bahamas.
"Why did I come back here?" he said to his court-appointed attorney, Ralph DeNune, while going over issues in the case before the arraignment.
Dressed in drab brown Lucas County jail coveralls, a leathery, tanned Mr. Haukedahl smiled at his son, Bart Haukedahl, as he was escorted in handcuffs into the courtroom by U.S. marshals.
Judge Jack Zouhary continued to March 2 a detention hearing that would have determined whether Mr. Haukedahl could be released on bond. He is being held in the county jail.
In denying bond on Tuesday, a U.S. magistrate expressed concern that Mr. Haukedahl could be a flight risk after learning from a federal prosecutor that a year ago he tried to change his residency status in the Dominican Republic to challenge extradition to the United States.
The indictment stems from an investigation into the operations of Mr. Haukedahl's defunct Springfield Township-based businesses, American Real Estate Association and Noble Group, from July, 1993, to March, 2004.
Assistant U.S. Attorney Seth Uram said at the arraignment that Mr. Haukedahl and others solicited agents and appraisers to join the trade groups with the understanding that membership entitled them to discounted professional liability insurance.
An offshore shell company, Midwest Insurance Co., was created by Mr. Haukedahl to falsely represent to members that they were insured when, in fact, coverage didn't exist.
To keep the scheme going, Mr. Haukedahl and unnamed co-conspirators paid off small claims and attorney costs from about $11.7 million in proceeds obtained through membership dues and transaction fees over the 11-year period, the indictment states.
It also alleges that money was used to pay personal expenses of Mr. Haukedahl and salaries of employees and claims administrators, and that funds were illegally funneled to a foreign bank.
He is charged with four counts of tax evasion for failing to report his true income to the Internal Revenue Service from 2000 to 2003 and failing to pay more than $250,000 in federal income tax.
Mr. Uram said if convicted on all counts, Mr. Haukedahl would face a sentencing range of 12 years to nearly 22 years in prison and more than $1 million in fines.
Judge Zouhary issued an order barring Mr. Haukedahl from disposing of any assets.
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