Jurors began deliberating late Monday in a trial for a Watford City accountant accused of defrauding investors for a loan linked to an oil boom murder-for-hire investigation.
Rene L. Johnson testified Monday and denied allegations from federal prosecutors that she misled investors or improperly diverted their funds.
Monday was the sixth day of trial in U.S. District Court in Bismarck, where Johnson is charged with mail fraud and wire fraud for allegations she used investors’ money for a high-risk loan without their knowledge.
The case is tied to James Henrikson, who owned oilfield trucking businesses with his ex-wife, Sarah Creveling, and was later convicted of ordering two killings.
Johnson, who provided accounting and other financial services for Henrikson, testified she had no idea about Henrikson’s background and she did not know he used aliases.
Johnson testified that in the spring of 2013, Henrikson came to her with an investment opportunity involving Doug Carlile, a wealthy businessman from Spokane, Wash., who was working on an oil leasing deal.
A loan Carlile needed was delayed and Johnson was given the opportunity to provide a bridge loan for 90 days. Johnson testified that Henrikson initially offered her the opportunity to invest $1.8 million and asked her to raise the money from her accounting clients.
“It was a flat, resounding no,” Johnson testified.
Later, the short-term loan opportunity was reduced to $400,000 with the promise that she’d double her money in 90 days.
Johnson testified that she talked to her business partner, Gene Koch, about the investment and he encouraged her to do more research. Johnson testified that she researched the people involved, including confirming that Carlile’s net worth was $12 million.
“I thought it was a safe investment,” Johnson testified.
Federal prosecutors say Johnson diverted funds that were invested with her business, RLJ Factoring, without telling the investors she was using the dollars toward the short-term loan.
When Johnson failed to get the $800,000 she was promised from Carlile, she threatened a lawsuit. Johnson was reimbursed in August 2013 for $400,000 and she returned the funds to her clients, plus interest.
Assistant U.S. Attorney Gary Delorme said during his closing argument that Johnson added the interest payment to cover up what she had done. Delorme argued he believes Johnson kept her clients in the dark about the investment so she could keep a majority of the profits for herself.
Koch, one of the investors and a key witness, died in 2015. Much of Monday’s testimony was focused on two letters signed by Koch in spring of 2014.
One letter was prepared by a man who was attempting to buy Koch’s half of the accounting business. The letter included the statement that Koch was not interested in the short-term loan and had advised Johnson against it.
Johnson disputed the contents of the letter and testified that Koch was bullied into signing it.
In a subsequent letter, Koch wrote that he believed Johnson would be cleared of all charges.
“Henrikson is a professional con man that seeks out good and trusting people to take advantage of,” Koch wrote.
Carlile was killed in Spokane in December 2013 and federal agents began interviewing Johnson during their investigation into Henrikson in January 2014.
Prosecutors also charged Johnson with making a false statement to law enforcement for allegedly not telling an agent she knew an alias Henrikson used.
Johnson’s attorney, Irvin Nodland, urged jurors to listen closely to the recording of the interview. Nodland said the agent interrupted Johnson as she attempted to answer about the alias. Johnson testified she later remembered the alias and told law enforcement.
Prosecutors also charged Johnson with lying on a loan application about the purpose of a bank loan. Johnson testified the loan was used to reimburse her expenses for an extensive remodeling of a rental home. Delorme alleges the loan, which was made days before the payment to Carlile, was used for the investment without the bank’s knowledge.
U.S. District Court Judge Daniel Hovland raised questions about that charge, calling it “a stretch.” Hovland allowed the jury to consider the charge but said he may address it later.
The jury received the case about 3:45 p.m. Monday and adjourned less than an hour later. Jurors are scheduled to resume deliberating Tuesday morning.