The couple was convicted last May of 45 counts of bankruptcy fraud, mail fraud, and wire fraud following a three-week trial in United States District Court in Minneapolis.
On Tuesday, Jan. 9, Judge David Doty sentenced them each to 33 months in prison for each count, to be served concurrently. Doty also sentenced the couple to three years of supervised release to follow their prison sentence and to pay $633,000 in restitution.
An appeal to their conviction was filed the same day.
The farm couple was convicted of bankruptcy fraud for using a corporation to hide assets during their 1994 bankruptcy. As a result, their debts to creditors were reduced from around $1.9 million to about $300,000.
They were convicted of mail and wire fraud for using another corporation to fraudulently receive farm program payments from the United States Department of Agriculture Farm Service.
They were convicted of two false statement charges apiece for denying ownership of these corporations in state court.
Ron and Diane Mages were acquitted of three charges at the trial, and their son, Jason, was acquitted of two counts during the trial.
Ron's and Diane's sentence was based on federal guidelines. According to criteria set by the court, the conviction merited a prison term of 33 to 41 months; a period of supervised release between three and five years; and a fine between $7,500 and $41,000,000.
The amount of restitution was determined by taking the value of both corporations ($363,000 for RODI, Inc., and $33,000 for GMI, Inc.,) and added the total of fraudulently farm program payments received by the couple ($237,000). The defense objected that net worth of these corporations was $250,000 less, but the court ruled for the greater value.
The court ordered $607,000 to the Farm Service Agency. The $237,000 is for fraudulent farm service payments, and the $370,000 for bankruptcy debt.
Local businesses listed by the court to receive restitution include the Eden Valley Warehouse, Eull Electric, the Paynesville Elevator, the Paynesville Engine Clinic, the St. Martin Co-op, and Voss Plumbing & Heating.
The amount involved in the fraud led to a stiffer sentence, as did court determinations that the defendants used sophisticated means and more than minimal planning. The court ruled against sentence enhancements for obstruction of justice and abuse of judicial process.
A defense assertion to use the sentencing guidelines from 1995 and not 1998 was not accepted by the court, which applied the 1998 guidelines for sentencing.
The Mageses remain free on bond. A voluntary surrender date to the Bureau of Prisons will be required after April 21, 2001. The court recommended Ron be incarcerated in a federal prison in Duluth, and Diane in a low security facility close to Minnesota.
Either the district court or the Eighth Circuit Court of Appeals could grant a release pending an appeal to these sentences.
The appeals process involves a series of briefs by the defending and prosecuting attorneys. The defense attorneys usually have 50 days to file their first brief, the prosecution then has 30 days to respond, and then the defense gets 14 days to make a final reply.
Fifteen minute oral arguments will then be scheduled before a three-judge panel in St. Paul. The pertinent legal issues will be identified, and these judges will ask the lawyers specific questions about the issues. The recent election appeals before the Florida Supreme Court and the United States Supreme Court used a similar procedure.
After the oral arguments, the judges make a decision and take a couple months to write a decision. A typical appeal takes at least six months.
Return to Archives