business

Kalin Dao can't fault her attorney for the 12-year prison sentence she got handed Friday.

The 33-year-old Vietnamese immigrant with a silver tongue and a knack for winning people's trust defrauded 517 people out of $7 million in a bogus investment scheme, gambling away nearly all of the money at casinos in Las Vegas and Minnesota.

Assistant Federal Defender Lyonel Norris tried every argument for a lower sentence. In a 42-page memorandum, Norris attacked the federal sentencing guideline recommendations for white-collar crimes as unjust and unreasonable when compared with certain other serious crimes.

Norris argued that Dao's crime was not particularly sophisticated, she was highly unlikely to commit similar crimes in the future and she suffers from a debilitating complications related to polio. Dao, of Minneapolis, should get a six-year prison term, he said.

Investor Marilyn Nightingale also asked the judge to go easy on her friend Dao. "She's had the opportunity to skip the country and she says, 'No, I didn't do anything wrong,' ... I don't understand how she could be accused of running a Ponzi [scheme]," Nightingale said. "She's honest."

Assistant U.S. Attorney James Lackner asked for 12 1/2 years, the top end of the recommended range. He said Dao "has no scruples whatsoever" and is unlikely to change, having defrauded people for 2 1/2 years. He said she flouted a consent decree with the Minnesota Commerce Department to stop selling unregistered securities by changing the name of her firm.

Her investors -- many of whom are immigrants like herself -- lost their retirement savings, homes and businesses, Lackner said. Some were in their 70s, and one couple was in their 90s, making it unlikely they will ever recover financially, he said.

Dao, who last May pleaded guilty to two counts of a 45-count indictment, apologized to the victims. "A lot of people have been hurt in this, and I am truly sorry," she said.

She described her parents -- who pleaded guilty to related crimes --as the "best people in the world." They deserve a break when they come up for sentencing, Dao said.

U.S. District Judge Joan Ericksen said she watched a 30-minute video clip of Dao making her sales pitch to investors at a meeting in Las Vegas. "It was a masterful presentation," she said. "That performance in a fraud is not something everybody has an ability to do."

Dao committed "a long-standing, complicated and extremely harmful fraud scheme" that wiped out people's life savings. "One of the victims wants me to lock you up and throw the key in the ocean," she said.

Ericksen told Dao that a short sentence would not deter similar crimes or punish her sufficiently. The judge ordered her to serve 12 years, followed by three years on supervised release. She ordered restitution of nearly $7.2 million, with payments of at least $50 a month upon her release.

'He lost everything'

"I'm happy," an investor from Shakopee said after the hearing. The man, who did not want to be identified, said he had invested $7,000 with Dao. He said he only hoped to get enough money to help with some extraordinary medical bills for his son, who was hospitalized with a severe immunodeficiency disease at the time. He said he called Dao and asked for his money back to pay some bills, and she advised him to take out a loan.

"I have a friend who put in everything he had. He took out money from his 401(k), from his home [equity]. He lost everything and had to leave the country," the man said, shaking his head.

The case against Dao was investigated by Robert Strande, of the U.S. Postal Inspection Service and Jacqueline Tschida of the criminal division of the IRS.

Dan Browning • 612-673-4493