business

The federal government has agreed to return about $22 million to employees of a Minneapolis company investigators raided in February 2010.

In an agreement signed by a federal judge Thursday, about 75,000 worldwide "members" or salespeople for Inter-Mark will get the money back that officials say they legitimately earned through the Internet-based, multilevel marketing company. For some, that could mean as much as $200,000. For others, perhaps just $100.

Company officials say the agreement is an acknowledgement that they were running a legitimate business that sold a legitimate product -- not the suspected Ponzi scheme alleged in search warrant affidavits 16 months ago.

"Today's outcome is validation of the Inter-Mark Corporation business model. I wonder if any business has been more researched and analyzed as Inter-Mark in the last year," said Bob Kinsella, Inter-Mark Corp. chairman of the board. "Sales associates all over the world should have complete confidence in the future of Inter-Mark Corporation."

Officials from the U.S. Attorney's Office wouldn't go that far, however. Assistant U.S. Attorney Jim Alexander would say only that they didn't want members to be deprived of their money.

Members exult in decision

Inter-Mark members at the hearing in St. Paul were giddy with their improved financial fortunes -- and steadfast in their support of Inter-Mark and iNetGlobal, its Internet advertising arm.

"I feel happy. I feel very proud to be part of iNetGlobal," said Annie Zhang, a leader among worldwide members.

Company officials insisted all along that they were doing nothing illegal. No one has ever been charged in connection with the raid, carried out by agents from the U.S. Secret Service and the FBI. Steven Renner, Inter-Mark's former owner, is in prison for a separate case of tax evasion.

In affidavits filed by the Secret Service and signed by U.S. District Judge Donovan Frank, investigators alleged that Inter-Mark and iNetGlobal made money by recruiting thousands of new customers, or "members" from around the world. Customers pay fees of up to $6,000 and can make money back through recruiting other members and surfing the Web. Company literature said the operation helps people make money working from home by helping them set up online businesses and then driving traffic to those businesses.

Agents seized nearly $26 million from bank accounts at the time of the searches. Last June, the government and the company agreed to release about $200,000 per month to pay Inter-Mark employees, cover insurance costs and pay taxes. But the members' money -- the vast majority of what had been seized -- was left in limbo.

Changes made, Renner gone

According to the agreement Frank approved Thursday, Inter-Mark has made changes. For starters, Renner is no longer associated with the company. In addition, the company's compensation plan, financial statements and even its Internet products all have been reviewed by outside experts. Inter-Mark was allowed to resume business in July 2010.

Kinsella became involved with Inter-Mark shortly before the raids.

"Many of my friends and my family said, 'Bob, why don't you just leave?'" he said. "But I traveled to Toronto, to Hong Kong, to Los Angeles and spoke with hundreds of members. They were excited about the future."

The immediate future involves a special administrator working with the company to verify member claims and disburse the funds. The process could take three or four months, officials said Thursday. The administrator is using a system devised by a University of Minnesota statistician to select samples of Inter-Mark's 75,000 members to verify claims. Money will eventually be placed into individual accounts.

Mark Kallenbach, an attorney for Inter-Mark, acknowledged that the government still could decide to bring criminal charges in the case. But, he said, "I think you can draw inferences" from the pending return of the money.

Said Peter Wold, another attorney hired by Inter-Mark: "I don't know of any other time where the government has seized that amount of money in the manner that they seized it -- and returned every penny."

James Walsh • 612-673-7428