Federal jury convicts local farm couple, but acquits their son

This article submitted by Michael Jacobson on 5/17/00.

A federal jury found Ron and Diane Mages guilty of 46 counts Wednesday afternoon. The Mageses were convicted of two counts of bankruptcy fraud, 28 counts of mail fraud, 11 counts of wire fraud, and two counts of making false statements apiece.

The Mageses, who farm south of Paynesville, were found not guilty of three charges of money laundering. Their son, Jason, who was charged with two counts related to the money laundering, was found not guilty on both counts. All three defendants were in court in downtown Minneapolis to hear the verdicts.

Federal judge David S. Doty, who presided over the three-week trial, read the verdicts after the jury ended its deliberations after a day and a half. Then he polled the individual jurors to insure their guilty verdicts were unanimous. The jury was comprised of ten women and two men.

After listening to the long list of guilty verdicts in her and her husband's case, Diane Mages greeted Jason's acquittal with a nod of her head toward her son.

Jason Mages said he was happy with his acquital, even though it didn't come as a surprise. During testimony, he said the investigating officer admitted he knew that the money Jason used to buy a farm came from legitimate sources.

"I was very pleased that the jury was able to wade through the allegations and arrive at the proper result," said attorney William Mauzy, who represented Jason Mages. "I've always believed that Jason was innocent of the charges."

Mauzy said the acquittal was the result of proving to the jury that money Jason Mages used to purchase a farm was from Mages's crop sales.

The counts
Ron and Diane Mages were convicted of fraud, which occurred while filing their 1994 bankruptcy. Assistant United States Attorney Mimi Wright, who prosecuted the case, succeeded in showing to the jury that the Mageses hid corporation assets while filing for bankruptcy. In 1994, the Mageses had their debts reduced from approximately $1.9 million to $300,000.

The defense argued unsuccessfully that Ron and Diane Mages did not actually own the corporations in question.

The jury also convicted Ron and Diane of mail and wire fraud. These charges stem from a wetland that was drained and farmed on land owned by one of the corporations. The Mageses received federal farm payments from the United States Department of Agriculture Farm Service that they were ineligible to receive because of the wetland. The separate counts represent the individual farm service payments received by the Mageses.

The Mageses were convicted of making false statements for denying their ownership of the corporations in question in state court in 1997.

The Federal Bureau of Investigation and the Office of the Inspector General of the U. S. Department of Agriculture investigated the case, according to the U.S. Attorney's office.

"We are very satisfied with the outcome of this criminal prosecution," said Wright. "The guilty verdicts in this case send the strong message that fraud against the United States Department of Agriculture, a government agency designed to help family farmers, will not be tolerated."

"Likewise," Wright continued, "the jury's verdict clearly establishes that there is a high price to pay when relief (which) is granted to honest debtors through bankruptcy is used fraudulently to enrich people who do not want to repay their creditors."

The defense counsel for the Mageses expressed surprise at the verdicts and promised appeals.

"I was stunned," said attorney John Brink, who represented Ron Mages, "because we believe the defendants are innocent and we're going to appeal."

Diane Mages' defense counsel, Peter Wold, echoed Brink's statements, saying, "I was stunned, but then you're dealing with a very powerful government."

The defense lawyers think several grounds for appeal exist. Wold called the them "significant." Brink said the grounds include prosecutorial misconduct. He said the prosecution asked questions during the trial that they were directed not to ask.

Sentencing and appeal
Any appeal will have to wait until sentencing in the case is completed. A pre-sentencing investigation, which is required in federal cases, will be done to determine the Mages' relevant conduct in the case. The investigation will make a sentencing recommendation to the judge based on federal guidelines.

The pre-sentencing investigation takes at least 60 days. Judge Doty can issue a sentence within the guidelines offered by the investigation, or he can give reasons to make his sentence either more lenient or more harsh.

Each count of mail and wire fraud carries a maximum penalty of 30 years in prison and/or a $1 million fine, according to the U.S. Attorney's office. Each count of bankruptcy fraud, conspiracy, and false statements carries a maximum penalty of five years in prison and/or a $250,000 fine.

Ron and Diane Mages remain free on an unsecured $25,000 bond. Judge Doty did warn them that criminal behavior would influence their bond status.

Diane Mages told the Press they would like to comment, but they need to wait until their legal situation is settled.

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