BUFFALO, N.Y. (WKBW) — U.S. Attorney Trini E. Ross announced Thursday that a Buffalo man pleaded guilty to wire fraud, a charge with a maximum sentence of 20 years in prison, and a $250,000 fine.
The defendant, 71-year-old Steven Blumhagen, defrauded three investors of $400,000, by soliciting his victims to purchase interests in entities that he claimed to manage, control, or own.
Blumhagen told the victims that he would use their investments to enable the entities to finance legal marijuana operations, real estate developments, and investment technology. The victims were also told that they would expect significant investment returns.
Instead of doing what he promised, Blumhagen used some or all of the money for personal expenses. He also used the investment of one of the victims to pay back a previous victim.
Part of Blumhagen's scheme involved an LLC allegedly owned by Blumhagen's children, something they knew nothing about.
One of Blumhagen's victims experienced extreme financial hardship, and as a result was forced to withdraw funds from a retirement account, which resulted in substantial penalties.
In 2006, Blumhagen pleaded guilty to conspiracy to commit mail fraud for bilking investors out of over $10 million and was sentenced to serve nearly five years in prison.
In 2018, he pleaded guilty to bank theft for involvement in a bond scheme, which raised over $1.4 million from potential investors. The defendant was on pre-trial release for the bank theft charge when he committed the wire fraud.
Blumhagen is scheduled to be sentenced on June 9, 2023.
