Deephaven couple with yacht, luxury lake home charged with welfare fraud

Andrea and Colin Chisholm struggled financially for a decade, depending on welfare checks to pay for food and medical bills and for job training. They and their young son were forced to live with Andrea's mother in south Minneapolis, and at one point had as little as $80 to their name.

At least, that's what they led benefit workers to believe. In reality, authorities say, the Chisholms were living the lifestyle of the rich and famous.

On public assistance forms they filled out yearly, they forgot to mention their $1.2 million yacht docked in Florida, Hennepin County Attorney Mike Freeman said Friday as he announced welfare fraud charges against the couple. Or the $1.6 million house they rented on Lake Minnetonka. And that Cavalier King Charles Spaniel pedigree breeding business that produced an award-winning dog at the Westminster dog show.

Oh, and the Chisholms also had about $3 million tucked away in various bank accounts, the charges say. They even took to passing themselves off as Scottish royalty — "Downton Abbey," Minnesota style.

"These were rich folks ripping off the system," said Freeman, whose tone moved from humor to anger during Friday's news conference. "I will make sure they do hard time."

That's if the police can find them. The Chisholms have been on the lam for six weeks, and Freeman hinted that they may be out of state and someplace warm.

Andrea Lynne Chisholm, 54, and Colin A.J. Chisholm III, 62, are accused of making $167,420 in fraudulent medical and food-stamp claims from 2005 to 2012.

Medica found that part of the $60,000 medical claims the company had paid out went for massages at The Marsh wellness center and spa in Minnetonka, court documents said. They received benefits from Minnesota even when they lived in Florida for two years, where they also obtained welfare checks.

The Chisholms were cut off at one point, but managed to get back into the system, Freeman said.

He referred to the couple as "Lord and Lady Chisholm," calling Colin as a "con man of the first order and a flimflam man," and describing their actions as something worthy of the movie "The Sting."

Just weeks after applying for their first welfare payment, Colin Chisholm bought his yacht, named "Wishing Star," from a man in Fort Lauderdale, Fla. He told the seller that he controlled about $30 million in Network Television Advertising on CNBC, the documents said. Around that time, the Chisholms were telling benefit workers that they had moved in with Andrea's mother in south Minneapolis.

Her mother still owns that home. Nobody was home to comment Friday.

They then engaged in a long legal battle to get their yacht back. At one point, Colin Chisholm told the judge he lived in Greenwich, Conn., an address investigators later determined was a UPS store. In the judge's ruling on the lawsuit, he said that he found Chisholm's testimony "at best evasive and at worst perjurious."

Two days before their son was born in 2007, the Chisholms told Florida public assistance workers that they were indigent and received cash, food support and medical assistance, the documents said. Minnesota ended up paying more than $22,000 in medical bills for Andrea's pregnancy.

While the Chisholms consistently reported no income or job employment when they reapplied for welfare, they continued to operate businesses or start up new ones. When trying to woo investors to a satellite-delivered digital television network based in Miami, Colin Chisholm claimed to have assets totaling more than $97 million, documents say.

"It's outrageous," Freeman said. "You hear of people getting public assistance when they're having a hard time in their lives and getting it back together. And then you see this."

By 2009, the Chisholms were living in Deephaven with Andrea's elderly grandmother, for whom Andrea had the power of attorney. The couple was funneling thousands of dollars from businesses that they hid from authorities through the grandmother's account, the documents said. They paid their monthly $2,750 rent in cash.

An arrest warrant has been issued for the Chisholms, who vacated their Deephaven home with no notice to the landlord and withdrew their son from school.

If they are found and convicted, the presumptive sentence for their felony fraud charge is probation. The maximum sentence would be 20 years in prison and a $100,000 fine.

"I can't imagine a judge in this district allowing the Lord and Lady to get probation," Freeman said.

He called the Chisholms' alleged systematic abuse of government programs designed to help the poor "beyond real." He said he couldn't say why they chose to go down such a path and if they might have taken advantage of flaws in the system that should be corrected.

"Imagine people like us," he said. "How do you do this?"