Two men were charged in a scheme that defrauded the Hamel Athletic Club out of more than $50,000, Hennepin County Attorney Mike Freeman announced Feb. 23.
Edward Roy Leuthner, 49, of Corcoran and Eric Benjamin Vargas, 48, of Andover were each charged with a single count of theft by swindle. They have their first court appearance March 16.
According to the criminal complaints, Leuthner who was the president of the Hamel Athletic Club, was added to the athletic club’s banking accounts in February 2016. The athletic club supports the little league baseball program in Hamel. Vargas runs a sports apparel company, Xtreme Custom Apparel. Freeman said the swindle began in early February 2016 when Leuthner approached Vargas and convinced him to send inflated invoices to the athletic club when they purchased jerseys and hats and then refund the difference in cash to Leuthner. Over time, the complaint alleges that Vargas also sent invoices for items the shop did not even sell, such as baseballs.
The complaint said Leuthner began his thefts in October 2015 when he wrote a reimbursement check to himself for $5,800 and indicated it was from the purchase of a Bobcat UTV from his mother. However, his mother told police she never owned a Bobcat and never received any money from her son, the complaint states. He also paid for a Visa gift card with $504 of athletic club money.
The scheme was uncovered by the treasurer of the Hamel Athletic Club in July when she asked Xtreme Custom Apparel to send her copies of several invoices, according to the complaint. When she received them, she realized the numbers did not match what had been paid from the club’s bank account.
According to the complaint, officers reviewed these questionable checks:
- Feb. 10, 2016, check #2933 for $5,400 and April 12, 2016, check #2958 for $5,400. Defendant Vargas’ invoice was for $10,800 for 240 jerseys; actual invoice was $2,308.50 for 123 jerseys – an $8,491.50 difference.
- March 1, 2016, check #2939 for $9,082. Defendant Vargas invoice was $9,082 for 478 hats; actual invoice was $1,440 for 144 hats — a $7,642 difference.
- March 10, 2016, check #2943 for $5,616. Defendant Vargas’ invoice was $5,616 for 144 baseballs. No actual invoice because Defendant Vargas confirmed that he did not sell baseballs.
- March 30, 2016,check #2954 for $12,584. Defendant Vargas’ invoice was $12,584.25 for 315 T-shirts and hats; actual invoice was $6,480 for 288 T-shirts and hats — a $6,104.25 difference.
- April 12, 2016, check #2956 for $600. Defendant Vargas’ invoice was $600 for online setup fee; actual price as reported by Defendant Vargas is $300 — a $300 difference.
- April 12, 2016 check #2957 for $4,221. Defendant Vargas’ invoice was $4221 for 469 T-shirts; actual invoice was $1,764 for 504 T-shirts — a $2,457 difference.
- May 24, 2016, check #2975 for $12,480. No invoice from Defendant Vargas; actual invoice was $934.50 for 135 T-shirts — a $11,545.50 difference.
- June 3, 2016, check #2976 for $4,536. There was no invoice from Defendant Vargas or actual invoice although the check memo line says T-shirts.
- June 8, 2016, check #3018 for $5,580. There was no invoice but Defendant Leuthner spoke with the treasurer and stated he needed the check because they had not met the online sales requirements and his personal credit card had been charged. Defendant Vargas confirmed that there is not an online sales minimum and there was no $5,580 penalty.
- July 1, 2016, check #2979 for $1,800 (memo line “half backpack”), July 8, 2016, check #3032 for $2,399.52, and July 11, 2016, check #2983 for $2,400 (memo line is “All-star gear”). Defendant Vargas admitted creating an invoice for $2,399.52 and providing it to defendant Leuthner but actual invoice for “all-star apparel and bags” was $5,005 — a $1,594.52 difference.
Further investigation revealed an Oct. 19, 2015, check #2922 for $5,800 made payable to Defendant Leuthner for reimbursement for the purchase of a Bobcat UTV, supposedly from Defendant Leuthner’s mother. Officers contacted Defendant Leuthner’s mother who confirmed that she did not own a Bobcat UTV and had never sold one to her son and never received $5,800 from Defendant Luethner.
Officers also spoke with BAP who received Hamel Athletic Club check #2989 for $500 Aug. 9, 2016. BAP reported that the check, which he at first didn’t realize was from an HAC account, was provided by Defendant Leuthner, to reimburse him for supplements he provided Defendant Leuthner.
Officers also were able to locate a Visa gift card in the amount of $504 taken out on the account of HAC by Defendant Leuthner May 17, 2016.
Freeman also said that the current Hamel Athletic Club treasurer (ASM) who was a reporting party relayed to officers that July 26, 2016, she contacted Xtreme Custom Apparel and retrieved copies of the true invoices.
ASM reported that the invoices she received she had never seen before and as a result, called Defendant Leuthner to question him about these issues. ASM reported that Defendant Leuthner became agitated when she began questioning him about the invoices, telling her that she “had no business calling and that he handled everything through Eric Vargas” and that she “could get them both in trouble.”
Leuthner and Vargas’ maximum sentences are 20 years and/or $100,000.