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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Former Spokane financial adviser sentenced to 5 years probation, restitution for fraud

The Thomas S. Foley United States Courthouse.  (JESSE TINSLEY)

As the airplane landed in Hawaii, Carolyn Bohnoff looked up and there was her nemesis.

Standing just ahead of her seat was Ronald W. Hannes, 74, her former financial adviser who already was charged with swindling more than $3 million from his clients, including Bohnoff. Then he reached up and grabbed a Louis Vuitton bag from the overhead bin.

“I can’t even explain how much that bothered me,” Bohnoff told U.S. District Court Judge Thomas O. Rice on Thursday in Spokane during the sentencing hearing for Hannes.

Hannes avoided going to federal prison largely due to his fragile health, Rice said while sentencing Hannes to five years of probation with a requirement that he pay restitution.

Hannes, who had been a registered broker for 33 years before he was stripped of his registration in February 2020, recruited at least 21 investors to put money into what he described to them as high-yield bonds.

Instead, he pocketed the money, according to court documents.

Hannes and his attorney, Philip Wetzel, continued to describe the crime as inaccurate explanations of investments in his personal business.

“I never intended whatsoever to harm anyone,” Hannes told the court.

Assistant U.S. Attorney Patrick Cashman argued that Hannes has shown limited remorse for his actions by continuing to downplay the fact that he personally profited from the fraud he admitted to last summer.

Hannes was initially indicted on eight counts of wire fraud, one count of mail fraud and one count of investment adviser fraud. He pleaded guilty to the one count of investment advisor fraud in July.

Cashman argued Hannes should be sentenced to just under 3.5 years in federal prison, followed by three years of probation. The recommendation already was lower than the standard sentencing range to account for Hannes’ acceptance of responsibility and his health issues, Cashman noted. Wetzel argued Hannes should get one year of house arrest followed by five years of probation.

The fraud was a “staggering breach of trust,” Cashman wrote in court documents. Victims of Hannes’ fraud said the financial loss was harmful but not nearly as hard to deal with as the breach of trust.

Many of Hannes’ victims were also his close friends. That includes Steve and Debby Northrop, who traveled with the Hanneses, spent time with each other’s families and supported each other through bad times, the Northrops said.

They also celebrated Hannes’ successes “not knowing it was someone else’s money,” Debby Northrop said.

“I was so blindsided by what he did to us and our friends,” she said.

Hannes’ family argued he is overall a good person who made one mistake.

Hannes’ son-in-law Tom Treppiedi, a deputy Spokane County prosecutor, said during his testimony at the sentencing that in his experience it’s powerful when someone shows “genuine and true remorse,” which he argued Hannes has done.

“Ron (Hannes) would never intentionally take advantage of people,” Treppiedi said of his father-in-law, who admitted to depositing clients’ money into his own accounts.

The crowd of about 25 victims and their loved ones seated in the courtroom scoffed at Treppiedi’s characterization of Hannes’ actions.

Treppiedi then turned around and stared at the group, hands clenched, before continuing to address the court.

“I cannot reiterate this point strong enough: he has my full support,” Treppiedi said.

Hannes’ family and his attorney argued that due to his poor health, he should not receive prison time. Hannes had a heart attack in October and underwent triple bypass surgery. He is in kidney failure and is a diabetic, among other health problems.

“His health is not an excuse, your honor, it’s the reality,” said Megan Hannes, his daughter.

Hannes apologized for his actions.

“I’ve harmed many people,” he said. “I want to do everything to make it right.”

Hannes described his actions as being negligent and not fully sharing the risk of investments, in contrast to prosecutors’ accusations of outright theft for personal gain. He noted he plans to sell his car and a timeshare in order to begin paying restitution, along with working full time while on probation to repay his former clients.

Rice questioned Hannes about why he did not plan to sell his home valued at more than $750,000. Hannes said he has a large mortgage and the value he would get out of the home was only a few hundred thousand dollars. He and his wife also wouldn’t have anywhere to go, he said.

Rice sentenced Hannes to five years of probation, which was less than the one year of house arrest Hannes had sought.

“Your case presents a conundrum to the court,” Rice told him.

Hannes would likely die within 30 days of arriving in prison, Rice said, leaving his victims without any chance of repayment.

Hannes’ family smiled at the sentence while those cheated by Hannes complained on their way out of the courthouse.