Mueller expected to plead guilty in $8.5 million ING embezzlement

CORRECTION, posted Aug. 18, 2008:
An article Aug. 7 on Page 1D incorrectly characterized the contents of an affidavit in the federal embezzlement case against Nathan Mueller, a former ING accounting manager. In his affidavit, Richard Grand-Scrutton, the former manager of Schiek's Gentleman's Club, said Mueller provided thousands of dollars in cash to the staff and entertainers between 2004 and 2006.

A former accounting manager at ING Reinsurance Corp. of Minneapolis is expected to plead guilty this month to federal charges that he stole $8.5 million in what appears to be one of the biggest local employee-embezzlement cases in years.

From 2003 to 2007, according to the indictment, the money from dozens of bogus transactions went toward real estate, Las Vegas junkets, cars, loans to friends, gifts to girlfriends and tens of thousands of dollars in tips at a downtown Minneapolis strip club.

Prosecutors declined to comment concerning the case against Nathan John Mueller, 34, of Eden Prairie, who was paid an $83,000 salary at the ING Group subsidiary. The fraud apparently was discovered by co-workers, and an ING lawyer alerted the FBI.

Mueller, who was indicted by a federal grand jury last month on a charge of mail fraud, pleaded not guilty at an initial hearing.

But his attorney, Joe Tamburino, informed U.S. District Judge Patrick Schiltz that a new plea will be entered at an Aug. 15 hearing. Tamburino said Wednesday that he expects Mueller to plead guilty, pending negotiations with prosecutors about a plea agreement.

Mueller faces as long as 20 years in prison, plus fines and restitution.

Dana Ripley, a spokesman for ING, a Dutch financial services conglomerate with U.S. headquarters in Atlanta, declined to go into details of the alleged fraud or how it ran for four years.

"We discovered the matter internally, acted quickly and took the case to the authorities," Ripley said.

The government is demanding forfeiture of houses that Mueller owns in Eden Prairie and Brooklyn Park, several hundred thousand dollars in bank and brokerage accounts and an unspecified amount of money and gifts that he gave to workers at Schiek's Palace Royale, a gentleman's club in downtown Minneapolis.

In a statement filed with the court, Richard Grand-Scrutton, a former employee of Schiek's, said Mueller left at least $40,000 in tips and gratuities with the floor staff at the strip club between September 2004 and December 2006. Mueller also supplied dancers with cash and gifts, Grand-Scrutton said.

Richard Haenisch, who identified himself in a letter to Schiltz as a Las Vegas gambling buddy of Mueller, said Mueller lent him $30,000 to cover gambling debts.

In a related filing, an attorney for Mueller's former wife said that she was unaware of Mueller's activities. She is asking for money from his frozen accounts to pay living expenses for her and their daughter.