Monday, September 25, 2023
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Ex-State Official Charged With Bank Fraud

RAPID CITY S.D. (CN) - Federal prosecutors accuse a former South Dakota fraud investigator of defrauding businesses and people of tens of thousands of dollars and laundering the money.

The federal indictment accuses Steven Knigge, 69, of conspiracy, wire fraud, bank fraud, money laundering and tampering with evidence. He pleaded not guilty on March 25 and was released. If convicted of all charges at trial, which has been set for May 31, he could be sentenced to 30 years in prison and fined $500,000.

The evidence tampering charge involves bank withdrawals and attempted withdrawals in July and August of 2015, according to the indictment.

Ace Crawford, a victim witness specialist with the U.S. District Attorney's Office in South Dakota, told Courthouse News that Knigge did not use his official title or connections in the alleged crimes, but he did send some of the fraudulent emails from his work computer.

"Steven Arthur Knigge, and others combined, conspired, confederated and agreed with each other to devise a scheme and artifice to defraud various individuals and entities and enrich themselves," according to the March 22 indictment.

"As part of the scheme to artifice and defraud, banks and individual account holders in Georgia, Arizona, Washington and Texas were targeted."

Knigge is accused of sending false emails to banks in four states, requesting a transfer as an account holder. He managed to move $42,000 into his own bank account, most of which he wired to another state or to Nigeria, according to the indictment.

It didn't take long for Knigge's bank, the Black Hills Credit Union, to catch on. On July 15, 2015, one day after receiving a transfer of $18,700 from KeyBank, the credit union discovered the transaction had been unauthorized and blocked Knigge's attempts to move more money out of his account, the indictment states.

Previous attempts to transfer money, on July 9 and 10, had been blocked by the sending banks, First Landmark Bank and Bank of the West, according to the indictment.

After assuring the Black Hills Credit Union that the transferred funds "rightfully belonged to him as part of an investment and that he was attempting to straighten it out," Knigge tried to continue the scheme using his Wells Fargo account, the indictment states.

He wired $23,500 from an account in Arizona with Arizona Bank & Trust that he billed as "professional services" to a company called Tegrous LLC on Aug. 19, moving much of the money to accounts in Nigeria that same day, prosecutors said.

Knigge retired after being confronted by law enforcement. But not until he "attempted to delete numerous e-mails maintained on his computer with the South Dakota Department of Revenue, which included discussions of wiring money via Western Union and MoneyGram, wiring instructions to specific individuals, and emails sent by the defendant attempting to solicit money from others," according to the indictment.

Knigge's attorney Angela Colbath declined to comment.

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