Home Seattle Press Releases 2014 Two Convicted in Multi-Million-Dollar Advance Fee and Alaskan Gold Mine Investment Schemes
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Two Convicted in Multi-Million-Dollar Advance Fee and Alaskan Gold Mine Investment Schemes
Company Targeted Developers in Areas Devastated by Hurricane Katrina

U.S. Attorney’s Office March 06, 2014
  • Eastern District of New York (718) 254-7000

Brad Russell was convicted today by a federal jury in Brooklyn on all three counts of the indictment for defrauding developers and their clients of more than $9 million through an advance fee scheme and for defrauding investors through an Alaskan gold mine investment scheme. Kristofor Lange, the vice president of Black Sand Mine Inc. (BSMI), was also convicted on both counts charging him for his role in the gold mine investment scheme. The jury’s verdict followed a six-week trial in United States District Court held before the Honorable Dora L. Irizarry. The trials of co-defendants William Lange and Frank Perkins are scheduled to take place on September 22, 2014.

The guilty verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS); and W. Jay Abbott, Acting Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).

“Through lies and deceit, the defendants took advantage of a national tragedy and unsuspecting investors and stole millions of dollars so they could line their own pockets. Their representations and assurances were not worth the price of the paper used to print the loan documents and stock certificates. We will vigorously pursue and bring to justice those who would defraud the investing public,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of the investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for their assistance in the case.

The evidence at trial established that Russell, together with others at Harbor Funding Group Inc. (HFGI), executed an advance fee scheme by targeting regions affected by Hurricane Katrina. Russell and his co-conspirators told land developers and their clients that HFGI had lenders and funds available to provide financing for their real estate projects. As a condition for financing, HFGI required its clients to place 10 percent of the loan amount in an attorney escrow account. Contrary to their representations, HFGI did not have lenders or funds available to finance the loans and stole the deposit money placed in escrow. Russell was the loan processor at HFGI and prepared and maintained the loan documents and escrow agreements. Through this fraudulent scheme, Russell and his co-conspirators stole more than $9 million from approximately 300 individuals.

At trial, the government also proved that Russell and Kristofor Lange, together with others, also executed an investment scheme and induced investors to invest in BSMI through lies and deceit. BSMI claimed that it was going to mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls and “webinars,” Russell, Lange, and their co-conspirators convinced investors to invest in BSMI by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI.

When sentenced by Judge Irizarry, Russell faces a sentence of up to 20 years’ imprisonment for wire fraud conspiracy for the HFGI scheme. Russell and Lange also face a sentence of up to 20 years’ imprisonment for securities fraud and a sentence of up to five years’ imprisonment for conspiracy for the BSMI scheme.

The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, David C. Woll, Jr. and Alixandra E. Smith.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.


Brad A. Russell
Age: 42
Residence: Gig Harbor, Washington

Kristofor J. Lange
Age: 30
Residence: Gig Harbor, Washington

Note: Kristofor Lange was not charged in the advance fee scheme.

The charges against the co-defendants William Lange and Frank Perkins are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

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