Late last year, former Enron CEO Jeffrey Skilling took up residence in Minnesota. Yes, the man at the helm of the largest bankruptcy in U.S. history—well, that guy is now our neighbor, albeit as inmate No. 29296-179 in a federal prison in Waseca. “We welcome anybody that comes to our community,” the town’s mayor told a newspaper shortly before Skilling’s arrival, as if he was handing over a key to the city.
Minnesota nice, it seems, knows no bounds. If anything, the hospitality the locals extended to the Enron exec is unremarkable: Over the years, we’ve offered boon comforts to countless bamboozlers and cheats. We’ve courted frauds and fakes and phonies, succumbed to the swindles of smooth-talking Scots, and invested in pyramid schemes hatched by our own native sons. Quackery, forgery, insurance fraud, and bilking Benedictine nuns—we’ve seen it all.
Now, nobody likes to be deceived. But sometimes ya gotta admire the conniver’s chutzpah, give credit where credit is due. So, here’s a list of 10 dissemblers who deserve not only their notoriety, but a tip of the hat, a bit of recognition—for putting the devil in the details.
No. 10: Wilbur Foshay
A tower builder does time
Wilbur Foshay arrived in Minneapolis in 1915 as a young man of modest means, and made a fortune buying and selling public-utility companies. With those funds, he built the largest structure west of Chicago, modeling it after the Washington Monument. In August 1929, Foshay hosted a three-day festival to celebrate the opening of the needle-shaped tower. John Philip Sousa composed a march for the occasion.
Foshay had his name carved near the top of the 447-foot obelisk as a reminder to one and all of who footed the bill for its construction—well, sorta…. Within days of the party, Foshay was running around New York trying to find capital to keep his business afloat. Turns out W. B. Foshay Company had a serious cash flow problem, and 1929 was a bad year for that sort of thing.
By November, Foshay’s operation was in receivership, but that didn’t stop him from tricking would-be investors into thinking everything was hunky-dory. He paid exorbitant dividends to a few investors, in the hopes of luring many others into investing in the company at an inflated rate. It didn’t work. The feds charged him with fraud, and he spent several years in Leavenworth before his sentence was commuted by President Roosevelt.
The verdict: More fool than outright fraud, Foshay was a bungler brought down by his own towering ambitions.
Sucker punch! Even the check to Sousa bounced. Ouch!
No. 9: Pat Forciea
As a member of the campaign team that helped boost Paul Wellstone into a U.S. Senate seat in 1990, Coleraine native Pat Forciea was long seen as a guy with a golden touch. Which leaves one to wonder what the late senator would have made of his distinctly impolitic actions in 2004.
Forciea, who once had a hand in promoting local athletic franchises like the Twins and the North Stars, was trying to assemble a small empire of minor-league hockey teams. Nothing wrong with that—except for a few details: Forciea forged some signatures (including that of Minnesota Wild owner Robert Naegele Jr.) on bank documents to get financing. He also embezzled more than $700,000 from a collection of Dairy Queens in Florida, a business that included high-profile attorney Michael Ciresi as an investor. There was no trial: Forciea pled guilty to two counts of bank fraud and four counts of wire fraud. He was sentenced to eight years in the federal penalty box and ordered to pay $5 million in restitution.
The verdict: Forciea claimed he suffered from bipolar disorder. Isn’t that punishment enough?
Sucker punch! While awaiting sentencing, Forciea fraudulently tried to obtain $10,000 in loans. The ploy only served to nix a prior plea deal—and added a few years to his prison term.
No. 8: Wallace, Willis, and Frank Reinhardt
Selling manhood—by the bottle
Long before Bob Dole met Viagra, the Reinhardt brothers of St. Paul were stiffing the competition in the “erectile dysfunction” market. Around the turn of the century, they established several “medical institutes” throughout the Upper Midwest that specialized in problems associated with “the secret diseases of men” and “lost manhood.” Their first store, in Minneapolis, lured clients with an astonishing window display, a waxworks tableau of “The Dying Custer.” In the center of the graphic scene, the Boy General lay on his back, one hand reaching imploringly upward, while a concealed bellows slowly raised and lowered his waxy chest.
Slack-jawed yokels, amazed at the remarkably lifelike facsimile, would head inside to see what else they could see. Once there, the Reinhardts steered them toward more wax figures, most of which exhibited advanced stages of debilitating diseases, with an emphasis on the venereal. At the exhibit’s end could be found a line of sober, bespectacled clerks who would offer consultations and a restorative tonic or two. Sales were brisk. By the time the gullible got to the pseudo-pharmaceuticals, they were usually convinced that, like Custer in the window, they, too, were nearing the Last Stand.
The verdict: Though eventually exposed by an intrepid journalist, the Reinhardts never wound up doing time for their deceptions. Probably because no customer wanted to testify in court about his lackluster sex life.
Sucker punch! The most popular Reinhardt remedy was known as the “come-back”—a name that was doubly true. Users believed the elixir could help reenergize their flaccid reputations, and the product, composed largely of syrup and alcohol, guaranteed the customers would return.
No. 7: Denise “Dee” Henderson
Beauty queen with a black eye
Though hardly in the league of big-time Minnesota swindlers, Denise “Dee” Henderson merits a post in the pantheon of frauds because few others would look nearly as fetching in heels and a swimsuit. In March 1999, Henderson was crowned Mrs. Minnesota International. Just a month before, however, the Mrs. was granted Social Security disability benefits related to a car accident that she’d survived in 1995.
Henderson claimed that she had suffered neck, back, arm, and leg injuries that prevented her from pursuing her career as a marketing consultant. Oddly, those same injuries didn’t stop her aerobics routine in the beauty competition; nor did they prevent her from lugging suitcases on her many trips as Mrs. Minnesota or scuttle her plans to participate in a dive class in the tropics. Unbeknownst to Henderson, all these activities were videotaped. In 2003, she was charged with taking $190,000 in fraudulent benefits from the federal government and, after being convicted, she got 48 months in the gray-bar hotel. No sash. No crown. No flowers.
The verdict: Insert dumb-blonde joke here.
Just deserts? Henderson began serving her time in Pekin, Illinois, in 2005. Supporters, including Senator Norm Coleman, have asked to have her moved to a Minnesota federal prison facility, nearer her family. The petition—as well as her request to ride home in a chauffeured stretch limo—has been denied.
No. 6: Dr. Eduard Friedrich von Rothkirch
My Resumé? It’s Academic
In May 1948, local newspapers got wind of plans to establish a new college in tiny Hillman, some 100 miles north of Minneapolis. They sent reporters to interview the founder, Dr. Eduard Friedrich von Rothkirch, who claimed to be a descendant of German nobility. Listed as head of the college’s political-science department was General Jonas Cernius, a former prime minister of Lithuania. At long last, it seemed, the world had discovered Minnesota.
Rothkirch’s claims of a noble background began to unravel when journalists discovered that he had been born Edward Tkach in St. Paul in 1919. Nonetheless, Rothkirch maintained he was who he said he was, claiming that his father had been a German spy during World War I, and that he had changed his name to avoid Russian assassins. Meanwhile, Cernius quietly slipped out of Hillman, returning to his former job as a factory worker in New Jersey.
The school never got off the ground, and when Rothkirch missed his rent, the land he’d had his eye on reverted to its former owner.
The verdict: Minnesotans weren’t quite so naïve after Rothkirch was exposed and his plans for higher-ed were debunked. Call it a teachable moment.
Just deserts? By the early 1950s, Rothkirch was doing time in the Wisconsin state pen for forging checks. At least the Russians couldn’t get at him.
No. 5: The Jerusalem Artichoke Swindlers
Field of schemes, foreclosed dreams
Through most of its history, the Jerusalem artichoke was simply a big weed. For a moment in the early 1980s, however, this same plant looked like gold to thousands of Minnesota farmers. Thanks for this temporary transformation go to a trio of Marshall entrepreneurs named Fred Hendrickson, James Dwire, and Lowell Kramer. In the midst of the oil crisis, these guys hatched a plan to promote the Jerusalem artichoke as a profitable cash crop. Not only did the plant make an excellent alcohol fuel, they claimed, but its byproducts could also be used in sweetening agents.
Problem was that the business, American Energy Fuel Systems, was long on promises, and short on markets. With the help of a modified pyramid scheme, in which first-year artichoke growers were enlisted to convince other growers to join the party, the company sold $25 million worth of seeds to Midwestern farmers. Unfortunately, no giant agri-business companies showed any interest in the plant, either as food or fuel, which left a lot of farmers holding bags of worthless seed and gazing at acres of unsalable crops. Hendrickson, Dwire, and Kramer managed to extract a small fortune from the company to fund their extravagant lifestyles before the law caught up with them. Each served time for the swindle, and after just two year’s growth, the company died on the vine.
The verdict: As you sow, so shall you weep.
Best scapegoating: Hendrickson, a devout Christian, had trouble accepting responsibility for his crimes. “It was Satan who stopped the Jerusalem artichoke,” he claimed, “because of all the good it would do.”
No. 4: Gary Lefkowitz
The $100 million Tax Cheat
Gary Lefkowitz set a new standard for white-collar crime in Minnesota in the mid-1990s. Lefkowitz was a California real-estate guy, but his firm, Citi Equity Group, developed affordable and moderate-income apartment buildings in Minnesota. Many projects were built, but others remained pipedreams. Lefkowitz was charged with siphoning off money from investors to pay for luxury homes, cars, corporate jets, and European vacations—a lifestyle once described as a “Gold Card existence.” He was also accused of fraudulently obtaining tax credits from the IRS. Ultimately, the cheater’s tally was said to top $100 million.
In 1995, the 42-year-old Lefkowitz was found guilty on 45 counts of fraud. He is currently serving his 24-year sentence in a federal prison in Oakdale, Louisiana, with a projected release date in 2015.
The verdict: Like the bosses involved in Enron, Lefkowitz bilked dozens of people and hoodwinked the government, so most Minnesotans were happy to see him go south for punishment. In exchange, it seems, the Southerners sent us Skilling.
Sucker punch! In one case, a witness charged that Lefkowitz took a $500,000 investment for an apartment project that was never built. The investors? A group of Benedictine nuns.
No. 3: Lord Gordon-Gordon
The Scot who was not
In days of yore, phony European aristocrats arrived on the shores of the New World by the boatload—or so it seemed. Lord Gordon-Gordon first popped up in Minneapolis in 1871, claiming he was searching for a way to alleviate overcrowding on his vast Scottish estate. He hoped to establish a colony of immigrants—tenants from his own property—on the Minnesota prairie. Wielding charm, impeccable manners, and that fancy double moniker, he persuaded local powers that he was prepared to invest millions in western Minnesota railroad lands. The Northern Pacific, strapped for cash and looking for a moneyed angel to finance the construction of a line into the Dakotas, wined and dined Gordon-Gordon on an extensive tour of the state’s western reaches. His Lordship platted, surveyed, and claimed hundreds of thousands of acres of Minnesota, before heading to New York with a glowing letter of introduction from Northern Pacific executives to East Coast financiers.
Using his Minnesota “property” like a letter of credit, Lord Gordon-Gordon was able to dupe such prominent New Yorkers as Horace Greeley and Jay Gould, who handed Gordon-Gordon $150,000 in Erie Railroad stock, before the law caught up with him and issued a court summons.
The verdict: We’re suckers for a rogue with a brogue.
Just deserts? Perhaps auguring the likely outcome of his trial, Gordon-Gordon skipped town before sentencing and headed for Winnipeg. When the Minnesotans who’d been conned by Gordon-Gordon heard the news, they sent a contingent north to arrest him. But it was too little, too late: Gordon-Gordon had by this time charmed his Canadian hosts. The police jailed the very posse that had hoped to put the pretender behind bars.
No. 2: Christopher Smith
Internet pill Pusher
Twenty-something Christopher Smith fashioned himself as an Internet entrepreneur: a successful, self-made capitalist, shrewdly using the tools of the new millennium to turn a buck. Federal prosecutors saw it differently: They charged that Smith, of Prior Lake, was little more than an online drug dealer. Smith may have been a high-school dropout, but his Burnsville–based Xpress Pharmacy Direct illegally sold more than $20 million in drugs, including addictive painkillers. A physician in New Jersey signed off on prescriptions for thousands of patients he’d never met—in exchange for bags of cash.
As profits rolled in, Smith lived large, with a million-dollar home and a Lamborghini. When the feds shut down Smith’s site, he simply moved the operation offshore. But in July 2005, the law collared the dubious druggist after he stepped off a plane from the Dominican Republic, where he had established another online pharmacy. Last November, Smith was found guilty on charges calling for at least 20 years in jail.
The verdict: Sheer brazenness would catapult Smith to the top of almost any list of miscreants. But it’s his impact on global warming that really galls us: In addition to the Lamborghini, he owned, according to one report, three Mercedes, a Ferrari, a BMW, a Jeep, a Hummer, a Chevy Tahoe, and a Cadillac DeVille limousine.
Sucker punch! In March 2006, prosecutors alleged that Smith, while in custody at the Sherburne County Jail, had tried to hire a hit man. Is no one making a movie about this?
No. 1: Franklin Steele
The Man who flipped Fort Snelling
Franklin Steele came to Minnesota to seek his fortune in 1837 and began his career as a storekeeper at Fort Snelling. But he quickly found real estate more to his liking. When he learned that Congress was about to allow homesteading on a swath of land just north of the fort, Steele rushed to the Falls of St. Anthony and staked a claim that in a few years time would lie at the heart of a burgeoning city.
That was Act One. Act Two began in the 1850s, when Fort Snelling fell into disrepair. The War Department decided to sell the garrison to a Minneapolis investor by means of a no-bid contract: The man who now held the keys to the fort was, of course, none other than Steele, who parceled up the property around the fort and began selling off 40-acre lots. Even after the real-estate market tanked, he still made off like a bandit. During the Civil War, he leased the property back to the feds and, at the end of the conflict, presented a bill for its use: That’ll be $162,000, please—more than five times the price Steele had paid for the land.
The verdict: Steele made only one mistake: He didn’t anticipate the condo rush.
Sucker punch! In 1871, the federal government tried to revoke both the original sale of the land and the rental agreement as fraudulent. It didn’t work. The army eventually got the building back, but Steele, never one to lose his shirt, kept 6,000 acres.
Tim Brady, a St. Paul freelance writer, and Burl Gilyard, a reporter with Finance & Commerce, are frequent contributors to Minnesota Monthly.