Thirst for Rolexes, fancy cars led to $7.5 million fraud

  • Article by: DAN BROWNING , Star Tribune
  • Updated: July 25, 2012 - 9:00 PM

A Colorado man admits taking millions from two men in bizarre investment scheme that included ex-KGB agent.

Evan Flaxman

A 37-year-old Colorado man with a law degree and an MBA robbed himself of a promising future by defrauding a Minneapolis radiologist and the son of his colleague out of $7.5 million. Now, instead of living the life of luxury he's accustomed to, he likely faces four to five years in a federal prison.

Evan Flaxman of Silverthorne, Colo., admitted to a federal judge in Minneapolis Wednesday that he fleeced Dr. William J. Ford III, a diagnostic radiologist, and Eric Barron, the son of St. Louis Park orthopedic surgeon Stephen E. Barron, and spent their money on Ferraris, a Porsche race car, a Rolex watch and payment of more than $100,000 in personal income taxes.

U.S. District Judge Patrick Schiltz asked Flaxman whether he knew that his actions were illegal, one of the required elements of the mail fraud charge to which he pleaded guilty.

"At the time I didn't realize it, no," Flaxman said. "As it progressed, yes."

The plea agreement Flaxman signed with the government contemplates a prison sentence of 51 to 63 months, although both sides reserved the right to argue for a sentence outside of that range. Flaxman has agreed not to appeal unless the sentence exceeds the range. Schiltz will decide the appropriate sentence after a presentence investigation.

Wild promises and threats

Court documents describe a bizarre investment scheme in which Flaxman claimed to be a multi-millionaire commodities trader and a partner in a Swiss hedge fund. Later, he claimed to have connections with a former KGB agent and member of the Russian mafia named "Vladimir" and warned that anyone who crossed him would pay with their life.

Flaxman said he initially intended to invest the money his friends entrusted to him. But when he began sending promissory notes to Ford and Eric Barron, along with statements showing that their money was earning profits, he knew he was committing a crime.

Ford met Flaxman through the Barrons during a trip to Colorado and sent him $6,959,000 over several years, according to court records. The Barrons have a home near Flaxman's about 70 miles west of Denver in the Rocky Mountains. Flaxman and Eric Barron became close friends.

U.S. Postal Inspector Mary Agnew wrote in court filings that Flaxman told Ford that he reminded him of his late father. Flaxman said his father had been cheated on his investments and offered to manage Ford's money so that nothing similar would happen to him.

Fictional partner

He claimed to have a partner named Nicholas Saskowitz who ran a successful hedge fund in Switzerland, but investigators say that appears to be a fiction.

Eric Barron received $500,000 in life insurance proceeds after the death of his brother in a white-water kayaking accident in 2008. Flaxman offered to manage the money in 2011. Barron eventually gave him $520,000 to manage.

Unlike most fraud cases, it looks as though Flaxman's victims will recover a significant portion of their money. U.S. District Judge Paul Magnuson recently ordered the forfeiture of $5.7 million in cash, a 2009 Mercedes Benz, a 2010 Land Rover Model Range Rover, a Porsche 911 GT3 Cup race car and Flaxman's $20,000 Rolex.

Dan Browning • 612-673-4493

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