Former CEO of Northwest Minnesota Bank convicted of involvement in “African Diamond and Gold” fraud


71-year-old Robert John Hager was also sentenced to two years probation after his release and is required to attend a substance abuse program and psychiatric counseling. He must conduct all searches of his financial records and must not charge new fees or open new lines of credit without the consent of his probation officer.

During his trial, Hager’s defense has argued that although he has made many criminal judicial decisions, he was ultimately the victim of fraud and, because of his own naivety, he fell victim to fraud. However, federal prosecutors argued that as recently as last January, Hager had a history of questionable financial transactions, which they compared to “Whack-a-Mole” in their investigation.

Hager’s attorney told the court that Hager was unaware of the January transaction when his wife allegedly shipped $ 40,000 in cash via UPS to Sacramento, California, despite Hager telling contemporary investigators that they were broke.

“Mr. Hager remains quite a threat, in our view, as Mr. Hager knows how to conduct the interview,” Attorney Amber Brennan said in a hearing in federal court in Minneapolis on Tuesday, March 2nd. “He knows how to call banks. He knows how to say, ‘Oh, I didn’t really get that, I’m trying to work together, I’m going to forward you all of these emails that I explained that, and oh, am I being cheated? ‘And then he goes to the nearest bank and tries to rummage through it. ”

Hager was CEO of Greenbush, Minnesota-based Border State Bank from 1993 to 2018. Greenbush is located in northern Minnesota, about 85 miles northeast of Grand Forks and 26 miles southwest of Roseau, Minn.

Court documents allege that sometime in 2015 or early 2016, Hager applied for a loan from a bank client to invest in gold and diamond transactions in Liberia, Ghana and Kenya for a promised quick return. It was around this time, after using up his personal funds to invest in the scam, that he began applying for a number of loans from clients, shareholders, directors of the bank and other friends and acquaintances, documents say.

In 2016 or 2017, bank customers took out loans in their own name or withdrew from existing loans and transferred the funds directly or indirectly to Hager according to the documents. To reclaim his personal money, he used his position in May 2016 to issue three unauthorized standby letters of credit worth $ 1.6 million to facilitate the purchase and delivery of diamonds and gold from Africa, and then hid his actions to keep the letters of credit from appearing in the bank’s general ledger.

Hager pleaded guilty last year to misrecording bank records in connection with a standby letter of credit he issued in May 2016 for $ 750,000.

An investigative report on the present – which took into account the amount of money involved in the crime, Hager’s previous criminal history, the fact that he abused a public position of trust, and the fact that he took responsibility for his actions and pleaded guilty – recommended that he be sentenced to 41 to 51 months in prison.

“To be clear, Mr. Hager was largely the victim and not a perpetrator of this fraudulent scheme, if not a terribly sympathetic victim,” said US District Judge Patrick Schiltz during the conviction. “Mr. Hager was so rich and so arrogant about his own abilities that he ignored one warning sign after another that he was betrayed. Where Mr. Hager crossed the line and the reason he’s here today is that he sank everything he did. ” In a desperate attempt to recoup his own investment, Mr. Hager began to abuse his position as CEO of that bank. ”