MINNEAPOLIS (March 2, 2018) — An insurance agent from St. Michael has been charged with using fake loans to defraud more than $200,000 from at least 10, mostly elderly clients, according to the Hennepin County Attorney’s Office and Minnesota Commerce Department
Herald Edward Liu, 66, is charged with six counts of theft by swindle in Hennepin County District Court. His initial court appearance is pending. The case was investigated by the Commerce Department’s Enforcement Division and the Commerce Fraud Bureau.
“Liu abused his professional position to steal the life savings of his older clients,” said Commerce Commissioner Jessica Looman, whose agency regulates insurance companies and agents in the state. “He told a series of clients that he needed to borrow their money for his business, but he was really spending it on personal expenses for himself.”
“This is another case of someone preying on vulnerable adults,” Hennepin County Attorney Mike Freeman said. “This is a growing problem and we are glad that police departments and the Minnesota Department of Commerce take these cases seriously and take the time to investigate them. We are contemplating filing aggravating circumstances in this case so if he is found guilty, he could receive a sentence more severe than that recommended by the Minnesota Sentencing Guidelines.”
According to the criminal complaint:
In October 2016, the Commerce Department received a complaint against Liu about a 90-year-old client who is legally blind. The client’s grandson discovered that she had loaned Liu more than $100,000 since 2011. The client said that Liu began asking her for loans because he told her his business was failing and he needed the money to keep the business going. Liu convinced her to liquidate most of her retirement investments so she could lend the money to him. She received promissory notes for some of the so-called loans, but not all. Although Liu paid back some of the money to the client, he often took money from her again shortly after giving her a repayment.
The Commerce Department obtained Liu’s bank records and found that he had deposited checks from other potential victims.
In an interview, Liu admitted that he had also borrowed money from a client in her late 80s from Minneapolis. The investigation found that checks from this client had been deposited in Liu’s bank account beginning in 2013. This victim said that Liu asked her for loans to keep his business afloat. He gave her promissory notes for the so-called loans. Liu had the victim liquidate investments from her trust to pay him. She received no repayment of the money she gave to Liu.
The investigation identified eight other victims. All were Liu’s clients, and he had asked each of them for loans to help his business. With one exception, the victims ranged in age from 74 to 90 years old. Liu convinced some of these victims to liquidate annuities and other financial instruments to make loans to him. Some received promissory notes from Liu, but none of these victims was repaid.
A review of Liu’s bank accounts showed that all of the so-called loans from clients were put in Liu’s personal account, not his business account. Most of the money was used to pay personal expenses such as cell phone bills, health insurance, internet provider bills, utility bills, groceries, clothing and credit card bills.
In a voluntary statement, Liu admitted taking “loans” from the victims and using the money to pay his personal expenses. He stated that he used some of the money from certain victims to pay back other victims.