Kerkhoven's former mayor, Willmar attorney face possible prison time for bankruptcy fraud

  • In US
  • 2022-08-12 22:36:00Z
  • By West Central Tribune, Willmar, Minn.

Aug. 12-ST. PAUL - Kerkhoven's former mayor and the Willmar attorney who represented him are facing possible prison time after reaching plea agreements in federal court in Minnesota on charges of fraud.

James Alan Rothers, 56, who resigned as Kerkhoven's mayor in early 2017 amidst a controversy over a rezoning request and a tower he erected, entered a plea agreement in U.S. District Court in Minnesota in November 2019 in which he pleads guilty to a charge of fraudulent concealment of bankruptcy assets. He is expected to be sentenced in December, according to information from the office of Assistant U.S. Attorney David MacLaughlin.

The offense carries a possible sentence of five years of imprisonment. According to the plea agreement, the sentencing guidelines call for a range of 18 to 24 months in prison, but the sentence is at the discretion of the court.

Attorney Gregory Alan Anderson, 63, represented Rothers in a Chapter 7 bankruptcy petition. Anderson entered a plea agreement in federal district court on Aug. 8 in which he pleads guilty to one count of fraudulent concealment of bankruptcy assets. A count of conspiracy to commit mail and wire fraud would be dismissed.

His offense also carries a possible sentence of five years of imprisonment. According to Anderson's plea agreement, the sentencing guidelines call for a range of 24 to 30 months imprisonment, but it is also at the discretion of the court.

As part of the agreement, Anderson agrees to be voluntarily disbarred from practicing law. He also agrees to testify truthfully in upcoming plea and sentencing hearings. Anderson began practicing law in 1987 but is currently retired.

Rothers petitioned the court in November 2015 for a Chapter 7 bankruptcy. The charges alleges that he and Anderson fraudulently concealed from the court $1,242,484 in assets belonging to Rothers.

The charges state that Rothers had concealed the following: $100,000 worth of gold coins in Fargo, North Dakota; approximately $686,000 in a deposit of the ABC Bin Company at Northwest Bank in Iowa; and liquid receivables, in the form of uncashed checks, totaling $455,484.25.

An original petition for disciplinary action against Anderson charged that he had represented Rothers on a variety of business and personal matters beginning in 2003.

"Respondent worked with Mr. Rothers to help Mr. Rothers hide assets from his creditors and his wife," said the petition. It alleges "he knowingly made false statements of fact, knowingly and dishonestly omitted material facts, and failed to take reasonable remedial measures when respondent knew Mr. Rothers made material false statements of fact to a tribunal."

According to federal court documents, Anderson created fake liabilities to create the appearance that Rothers was insolvent when, in fact, Rothers could easily have paid all of his creditors.

Specifically, Anderson arranged to have a fictitious lawsuit filed against Rothers, and then instructed Rothers to default in that lawsuit. This created a judgment of approximately $608,000 against Rothers to further the appearance that he was insolvent.

Anderson also created documents that made it appear that an Iowa company had loaned $240,000 to Rothers and that Rothers had an obligation to repay this loan. The loan was entirely bogus and created to bolster the appearance of Rothers' insolvency.

In Chapter 7 bankruptcy, a trustee liquidates a debtor's assets, other than some property that is exempted, and uses the proceeds to pay creditors.

The investigation that led to the charges against Rothers and Anderson followed a complaint filed in January 2017 by the trustee for the creditors involved in Rothers' bankruptcy petition.

Attorney Richard Stermer of Montevideo charged that Rothers had "secreted assets in the bankruptcy in the name of corporate entities or with his significant other, Stephanie Voxland."

Among the allegations brought against Rothers in federal court were claims he placed assets in fake companies and created an offshore corporation on the island of Nevis in the Caribbean.

Rothers resigned as mayor only months into his term in 2017. He had taken the city to court over a 54-foot-tall concrete tower he built on his property along U.S. Highway 12 in Kerkhoven. The City Council had rejected his request to rezone the commercial property that he had remodeled and where he made his home.


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