Investment Advisor Steals $2.1 Million from Clients
A federal court sentenced Kristi Margaret Berge to 30 months in federal prison for scamming millions from investment clients.
Berge also co-owned and operated J&K Connect LLC, a company that invested in real estate through buying, renovating and re-selling properties. Prosecutors said this company figured in the investment scam as well.
Promised Clients She Invested Their Money in ‘Safe’ Accounts
From June 2020 through February 2023, Berge misappropriated $2.1 million from clients by telling them that she would keep their money in safe and secure investment accounts, according to a Justice Department press release. Those purported accounts included individual retirement accounts and 401(k) retirement savings plans.
Instead, Berge fraudulently misappropriated the money by repeatedly withdrawing client funds in varying amounts between $5,000 and $220,000 and depositing the funds into bank accounts she controlled, according to her charging documents.
Berge used clients funds to purchase multiple properties in Edina for her real estate business, said prosecutors. She tried to conceal her fraud by falsely labeling her illicit withdrawals as “management” or “administrative” fees and by creating fabricated records to give the false impression that she had authorization to withdraw clients’ investment funds.
United Airlines Lawsuit
Earlier in 2024, United Airlines filed a lawsuit in Minnesota federal court against Berge and her business entities, claiming that she “improperly used employee retirement plan assets for personal gain.”
In their suit, United attorneys stated that their employees can invest retirement contributions via a self-directed brokerage account known as a Personal Choice Retirement Account via Charles Schwab and can choose to hire an independent advisor to advise on their funds in the PRCA.
Berge was allegedly one of the advisors and entered into contracts with many participants. However, some employees’ contacts included agreements with J&K Connect, in which they agreed to loan assets from their PRCA to the real estate company.
KSI, operated by Berge, would then charge a “management fee.”
In their complaint, United claimed this was fraud.
“Through this arrangement, and by falsely representing the amounts to the Plan as fees, Berge, KSI, and J&K contained control over Plan assets to which they were not entitled, with the intent to use those assets for their own gain,” United lawyers wrote in a legal brief.
Requested Home Confinement
Although Berge’s attorneys didn’t comment on this topic publically, her representative Bruce Rivers, based on the information gathered by the Minnesota Star Tribune, wrote to the court and asked for a sentence of six months home confinement, claiming that Berge had no prior criminal history and had never “set out to hurt anyone.”
“Her business took a turn, and she made some serious mistakes along the way and has every intention to repay those who were harmed,” Rivers wrote to the paper.
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