A nearly penniless Erick Hansen on Wednesday blamed his “arrogant enthusiasm” for promising pie-in-the-sky profits to investors and well-paying jobs in downtown Spokane to city officials, part of a wire fraud scheme that will land him in federal prison for five years.
“We were a legitimate business,” Hansen told U.S. District Court Judge Thomas O. Rice at a sentencing hearing in Spokane. “We were doing the right thing.”
Chris Bugbee, the Spokane attorney representing Hansen, argued successfully the government hadn’t provided enough evidence to show his client had left at least five investors destitute, which would have lengthened his time in prison. Rice’s sentence shaved 20 months off of the nearly seven-year term prosecutors requested. Rice also said Hansen may self-report to prison, and the former U.S. Marine left the courtroom freely Wednesday morning.
“Much (of the money) was lost when Mr. Hansen was trying to make a very honest and sincere go of it,” Bugbee told Rice.
In all, investigators believe up to $7 million was given to Hansen and his companies, which went by various names while he was doing business in Spokane. He arrived in Spokane nearly a decade ago under the banner BlueRay Technologies Inc., moving in to the old Commercial Building on First Avenue. Hansen promised city leaders he’d create well-paying jobs and lobbied at one point for college-age tenants to live at 1111 W. First Ave. and learn the trade of digital media production.
The government’s case focused on a four-year period beginning in October 2010, according to an indictment handed down by a federal grand jury in December 2014. Hansen had been ordered to pay restitution to investors of another failed company in California. Investigators, chief among them Lisa Jangaard of the FBI, alleged he’d been using investments to pay off the California debts and fund lavish trips to Hawaii and elsewhere. Jangaard reviewed financial records seized from Hansen’s downtown office and interviewed former employees.
The company received $2.8 million during this time, according to court records. James Goeke, the assistant U.S. attorney in charge of the case, said Hansen used “boiler room” solicitation in the Los Angeles area to target investors, from Beverly Hills, Arizona, Colorado, Texas and elsewhere, who pumped tens of thousands of dollars into the company on the promises they’d receive returns of between 300 and 500 percent.
“This case represents very significant fraud, and a very significant loss in the community,” Goeke told Rice.
One of those dogged solicitors, Sean Boyd, became an executive in the company and was also indicted on charges of wire fraud. He pleaded guilty, as did Hansen, and Rice sentenced him in June to three years in federal prison.
Bugbee told Rice that his client had lost all his assets, was living in subsidized housing in California and was driving a car worth $3,000 to and from court dates in Spokane. Goeke said the equipment that had been seized in the basement of the Commercial Building was “valueless” and likened it to “an 8-track system,” prompting scoffs from Hansen. He later said it was worth hundreds of thousands of dollars, though proceeds from a sale had gone to an investor.
“It was state of the art,” Hansen, clad in a sweater, dress shirt and jeans, said of the equipment. A former employee told investigators Hansen would dress up the janitor in a lab coat and act as though he were manufacturing discs when potential investors inspected the factory, something Hansen would refer to as “managing the perception,” according to court documents.
In his statement before sentencing, Hansen insisted his company was a few good breaks away from turning the corner, touting his deal in the 1990s with Roy Disney, nephew of visionary filmmaker Walt Disney, and congressional recognition from California Rep. Darrel Issa.
“I did make mistakes,” Hansen said, before accusing prosecutors of inserting “factual inaccuracies” into a report prepared for his sentencing that exaggerated his debts to investors and ignored a license he’d obtained to manufacture Blu-ray discs, a technology pioneered and owned by Sony.
Rice reminded Hansen that he also had lied to investors about a contract he had with a Canadian company to distribute an animated film and his ability to manufacture Blu-rays with exclusive footage of Michael Jackson following the pop singer’s death in 2009.
“Apparently these people had money to hand you,” Rice said. “That doesn’t detract from the fact you lied to them, or hid the truth from them, and that’s what makes it a crime.”
No bilked investors appeared in the courtroom Wednesday to speak about Hansen’s crimes.
Hansen handed over ownership of the property at 1111 W. First Ave. to company shareholders in a quit claim deed filed May 21, 2009, according to county property records. Dantech LLC, a Kennewick-based corporation, bought the Commercial Building from Hansen’s shareholders in December 2009 for $1.8 million. The building now houses the recreational marijuana store Lucky Leaf and marijuana processor Odo.
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