Duluth man faces fraud charges after arrest in HondurasWhen his alleged partner, Daniel TePoel, began serving an 11-year sentence for defrauding investors of out of $2.5 million, indicted co-conspirator Gary Milosevich already was a fugitive believed to be hiding in Panama.
By: Kevin Murphy/For the Superior Telegram, Superior Telegram
MADISON — When his alleged partner, Daniel TePoel, began serving an 11-year sentence for defrauding investors of out of $2.5 million, indicted co-conspirator Gary Milosevich already was a fugitive believed to be hiding in Panama.
That ended last year when Milosevich, formerly of Duluth, walked into an American embassy in Honduras to renew his passport. Instead, authorities arrested him on an outstanding warrant, and deported him to the U.S.
On Jan. 12, a judge in Houston ordered him transferred to federal court in Madison to face charges of conspiracy to commit wire and mail fraud that were filed against him and TePoel in 2007.
On Friday, Milosevich, 57, pleaded not guilty to the charges that carry maximum penalties of 20 years in prison and restitution.
Magistrate Stephen Crocker noted the government has produced nearly 5,000 pages of evidence against Milosevich and a Sept. 24 date for trial that is expected to last five to seven days.
Crocker found that Milosevich remained a flight risk and continued his detention but gave Milosevich’s attorney, Erika Bierma, an opportunity to make a case later for his release on bond.
After court, U.S. Attorney John Vaudreuil said much of the same evidence used in TePoel’s 2008 trial would be used against Milosevich as they both allegedly engaged in the same fraudulent scheme.
“They both talked to investors … and sold them certain kinds of investments that didn’t exist,” Vaudreuil said.
TePoel, formerly of Barnes, has unsuccessfully appealed his sentence, which his serving at the Duluth Prison Camp.
According to the indictment:
Between Dec. 3, 1977 and March 2007, TePoel was a mortgage broker in Duluth when he teamed up with Milosevich to solicit investors in what they called an international trading program between prime banks. The men said their unique access allowed them to purchase bank securities at a discount and re-sell them at higher prices earning millions of dollars.
TePoel and Milosevich characterized the investments as no risk and high yield with some returning a guaranteed 120 percent annually.
Investors began writing checks to TePoel who deposited them in his Rainbow Management Trust account at Republic Bank in Duluth. In January 2000, Milosevich opened an account at a bank in Grenada and investors began wiring funds directly to the bank.
Instead of investing their clients’ funds, the defendants use the money for personal living expenses and travel, and to buy a home in Barnes and equipment for a resort in Grenada that failed.
By 2002, federal authorities were investigating TePoel and Milosevich and their clients began demanding their money back. TePoel stalled them by asking them to fill out paperwork but he didn’t return their money.
As the investigation continued, TePoel warned his clients not to cooperate with authorities or they would risk losing their money. Some clients continue to defend TePoel at his trial in February 2008, believing it was their best chance to get their money back, Vaudreuil said Friday.