business

Classic cars, some worth hundreds of thousands of dollars, lie at the heart of a federal indictment handed up in St. Paul Wednesday charging Fred Engelhart of Elkton in southeastern Minnesota with fraud and money laundering.

The indictment says Engelhart, who ran a popular summer car show in his hometown, population 149, sold cars for others but then kept the money for himself. He faces seven charges, including wire fraud, money laundering, false statements to a financial institution, bank fraud and possession of a short-barreled shotgun.

The indictment does not give specifics but says broadly that Engelhart ran a scheme in which he solicited investors' money on the pretense it would be invested in classic cars. It also alleges he sold cars for others but then kept the buyers' money and would not turn over vehicle titles.

Engelhart bought real estate or paid personal debts with the cash from car sales, court documents say. The money laundering charge stems from $250,000 wired into his account at the Farmers State Bank in Elkton, proceeds "derived from specific unlawful activity" that he used to buy real estate, the indictment says.

Engelhart is accused of lying to a representative of Rushford State Bank, saying that some of the collector cars on his property were his. He used the cars as collateral for a $500,000 loan from the bank in 2007, resulting in the bank fraud charge.

Engelhart has also been named in at least three civil lawsuits filed in 2007 and 2009 over the ownership of a 1971 Dodge Challenger worth hundreds of thousands of dollars. An Illinois man filed a lawsuit in 2007 after he bought the Challenger for $650,000 from Engelhart but never got the title. A lawsuit filed earlier this year by BW Motorsports of Fargo, N.D., alleges the Challenger is theirs, and that the business sold it to Engelhart but he never paid for it and thus never received the title. Engelhart then sold the Challenger to the man in Illinois, the suit alleges.

Engelhart is known in Elkton for sponsoring a large auto show each summer, the "Engelhart Performance Customer Appreciation Day." Written up in a magazine that features Chrysler cars, the show described "hundreds of cars" on hand.

Matt McKinney • 612-673-7329