Insurance fraud suspect thought dead arrested in Canada

Canadian authorities said Friday that they had arrested an Eden Prairie man who fled the Twin Cities several months ago in a small plane after faking his own death.

Travis Magdalena Scott, 34, was awaiting sentencing for defrauding an insurance company out of more than $11.5 million at the time of his disappearance.

Federal authorities said they will seek Scott's extradition. He was arrested Dec. 22 after a pharmacy employee in Winnipeg alerted police that a customer might have been trying to use a forged prescription.

Scott was carrying bogus identification at the time, and it took investigators some time to determine his true identity, Winnipeg police spokeswoman Natalie Aitken said Friday. A recording of the conference was provided to the Star Tribune by the news organization CBC Manitoba.

Once police determined Scott's true identity, Aitken said, they found a federal arrest warrant issued out of Minnesota and contacted the U.S. Marshals Service, which is seeking to extradite him.

A search of Scott's apartment in downtown Winnipeg turned up $80,000 in gold coins, $30,000 in U.S. and Canadian currency, $750 in silver coins, an electronic Taser stun device, "bear mace," numerous forged prescriptions, a number of prescription drugs, computer equipment and printers. A search of a Jeep Liberty that police linked to Scott produced a loaded handgun, Aitken said.

Scott is being held in the Winnipeg Remand Center on charges of possessing prohibited and restricted weapons, Aitken said. She said additional charges may follow after an investigation by the Royal Canadian Mounted Police and the Canadian Border Service Agency.

Scott was described in court papers by his attorney, Marsh Halberg, as a "shy, small, soft-spoken man" and a gifted computer programmer. He was committed by his father for about five months in 2001 in Sawyer County, Wis., for mental health issues.

A faked suicide

Halberg said Friday night that he was informed by authorities in Minnesota that in late summer they found a kayak washed up on Lake Mille Lacs with a note in it from Scott saying that he was going to tie weights to himself and drown. A body from such a suicide would not have been recoverable from the middle of the lake. Before Scott was located in Canada, authorities in Minnesota had been debating about what to do with his case, Halberg said.

Scott pleaded guilty in May in St. Paul to one count of wire fraud and one count of money laundering related to fraudulent claims he filed for his business, Security Management Technologies. The policy covered both the property of the business, which allegedly included supercomputers, and business interruption. If the property was damaged, Scott could either take the cash value of the damaged property, as determined by the insurer, Zurich North America, or replace the damaged property up to his policy limit of $9.5 million.

On June 1, 2008, about a year after he took out the policy, Scott reported that his business had been struck by lightning and sustained heavy damage. Scott opted to exercise the "replacement option" on his policy for up to the $9.5 million policy limit, prosecutors said, plus $1.9 million for business interruption.

It's unclear where he got the plane that he flew into Canada, or the Jeep that authorities say he was driving.

Shortly before Scott allegedly fled, federal prosecutors asked U.S. District Judge Donovan Frank in an August court filing to sentence him within the advisory federal guidelines range of 87 to 108 months in prison. The maximum terms are 20 years in federal prison for wire fraud and 10 years for money laundering.

Scott's criminal history indicates that he's committed several types of fraud in the past using several aliases, Assistant U.S. Attorney Nancy Brasel wrote. She said that records cast doubt on whether he ever had supercomputers, and that evidence indicates that no lightning strike took place on the day he reported it damaging his company's hardware.

"This crime is not an anomaly, but rather a continuation and escalation of the defendant's past criminal conduct. Moreover, the defendant's dishonest acts do not appear to be over," Brasel wrote.

She wasn't talking about his subsequent flight to Canada, but rather, the fact that he had told a probation officer that he had attended the University of Illinois in Chicago to pursue a degree in electrical engineering, when the school says it has no record of his attendance.

Brasel said she would present evidence to resolve the dispute when Scott is eventually sentenced. She has since resigned to become a judge in Hennepin County.

Assistant U.S. Attorney Timothy Rank, who heads the white-collar crime division, has taken on the case, Cooney said. She said additional charges are expected.