In April 2014, Michael Robert Drilling, 47, of Grand Marais pled guilty to one count of Securities fraud in U.S. District Court. On December 11, United States Attorney Andrew M. Luger announced that Drilling would be confined to 60 months in federal prison for devising and executing a multi-million-dollar investment fraud scheme. He was also ordered to make restitution of $5,778,877.88
According to a news release from the Federal Bureau of Investigation (FBI), Drilling was sentenced on December 10, 2014, before Judge Ann D. Montgomery in U.S. District Court in Minneapolis.
According to Drilling’s guilty plea and documents submitted to court, from May 2009 through March 2014, Drilling defrauded 13 investment clients for more than $5.7 million. The FBI release explains that through his company, Financial Advisory Partners LLC, Drilling developed personal relationships with these clients and convinced them to entrust to him the management of their investment funds. In order to conceal the theft, Drilling created phony accounts for each of his clients using a financial planning website, eMoneyAdvisor.com, that made it appear as if investment funds had been placed in real investment vehicles. False information was entered, including investment holdings, balances and performance, which clients saw when they logged into the account. Some of Drilling’s victims lost their life savings
In total, the FBI reports that Drilling stole more than $5.7 million in investment funds from 13 of his clients. When Drilling entered his guilty plea, his defense attorney Allan Caplan said Drilling spent the money on himself and lost it in investments and at casinos. Caplan said his client “felt terrible” about his actions.
Before establishing his own investment firm, Drilling, formerly of Prior Lake, Minnesota, was a registered broker with National Planning Company from 2005 – 2009. He started his own company in May 2009.
“He had been legit for 20 years, then his life fell apart,” said defense attorney Caplan. “He was lying to these people he had known for years. That’s why he turned himself in.”
After Drilling turned himself in, an investigation by the Federal Bureau of Investigation interagency Financial Fraud Enforcement Task Force was launched. The case was prosecuted by Assistant U.S. Attorney Timothy C. Rank.
In Grand Marais, Drilling worked as outfitting manager at Voyageur Canoe Outfitters and was the successful bidder in the county’s auction of the tax-forfeited Tip of the Trail property on June 24, 2013. Drilling won the 4 1/2-acre property on Saganaga Lake with the minimum bid of $350,000, the appraised value of the property. At that time, he told the Cook County News-Herald he would be living at the property.
County Auditor Braidy Powers said Drilling made a $35,000 down payment. Subsequent payments are due annually with the first payment due soon, on December 31, 2014.
However, under his plea agreement, Drilling agreed to forfeit all real and personal property derived from proceeds traceable to the frauds. This could include the Tip of the Trail property as well as another property in Sedona, Arizona.
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