Former mayor of Kerkhoven, Willmar’s lawyer faces jail time for bankruptcy fraud

August 12—ST. PAUL — The former mayor of Kerkhoven and the Willmar attorney who represented him face jail time after reaching plea deals in federal court in Minnesota for fraud.

James Alan Rothers, 56, who resigned as mayor of Kerkhoven in early 2017 amid controversy over a rezoning request and a tower he erected, reached a plea deal in court of the United States District of Minnesota in November 2019 in which he pleaded guilty to a charge of fraud concealing bankruptcy assets. He is expected to be sentenced in December, according to information from Assistant US Attorney David MacLaughlin’s office.

The offense is punishable by up to five years in prison. According to the plea agreement, the sentencing guidelines call for a sentence 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 reached a plea agreement in federal district court on August 8 in which he pleads guilty to one count of fraudulent concealment of bankruptcy assets. One count of conspiracy to commit mail and wire fraud would be dismissed.

His offense is also punishable by a five-year prison sentence. According to Anderson’s plea agreement, sentencing guidelines call for a jail term of 24 to 30 months, but that’s also at the court’s discretion.

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

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

The charges say Rothers hid the following: $100,000 in gold coins in Fargo, North Dakota; approximately $686,000 in an ABC Bin Company deposit at Northwest Bank in Iowa; and cash receivables, in the form of uncashed checks, totaling $455,484.25.

An original motion for disciplinary action against Anderson accused him of representing Rothers in various business and personal matters beginning in 2003.

“The defendant worked with Mr. Rothers to assist Mr. Rothers in hiding assets from his creditors and his wife,” the petition states. He alleges “he knowingly misrepresented facts, knowingly and dishonestly omitted material facts and failed to take reasonable corrective action when the defendant knew that Mr. Rothers had made material misrepresentations of facts to a court”.

According to federal court documents, Anderson created false liabilities to make it appear that Rothers was insolvent when, in fact, Rothers could easily have paid all of his creditors.

Specifically, Anderson arranged for a sham lawsuit to be brought against Rothers, and then ordered Rothers to default in that lawsuit. This created a judgment of approximately $608,000 against Rothers to make it appear that he was insolvent.

Anderson also created documents showing that an Iowa company had loaned Rothers $240,000 and that Rothers had an obligation to repay that loan. The loan was entirely bogus and created to bolster Rothers’ appearance of insolvency.

In Chapter 7 bankruptcy, a trustee liquidates a debtor’s assets, except for certain exempt property, and uses the proceeds to pay creditors.

The investigation that led to the charges against Rothers and Anderson follows a complaint filed in January 2017 by the trustee of creditors involved in Rothers’ bankruptcy filing.

Montevideo attorney Richard Stermer accused Rothers of having “hidden assets in the bankruptcy on behalf of corporations or with his significant other, Stephanie Voxland.”

Among the allegations against Rothers in federal court were allegations that he placed assets in bogus companies and set up an offshore company on the Caribbean island of Nevis.

Rothers resigned as mayor just months into his term in 2017. He sued the city over a 54-foot-tall concrete tower he built on his property along the US Highway 12 in Kerkhoven. The city council had denied his request to rezone the commercial property he had remodeled and made his home.

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