Two sentenced to 80 months each in prison for stealing $1.5 million in separate schemes

Monday, November 23, 2015

The Hennepin County Attorney’s Office successfully convinced a judge to hand out stiffer sentences than are normally called for in two cases Monday against white collar criminals who, combined, stole more than $1.5 million from their victims.

Jeffery Petersen, 57, of Edina, who swindled a dozen victims out of $337,000, was sentenced to 80 months in prison. Following his sentencing, Stephanie Castillo, 42, of Eden Prairie, also received 80 months in prison for embezzling $1.3 million from her employer, Balderson Management, Inc.

Petersen, 57, of Edina, pleaded guilty to 22 counts of securities fraud and theft by swindle. His attorney asked for probation, but Hennepin County District Court Judge Tanya Bransford agreed with the county attorney’s office that Petersen deserved prison time. In addition, he was ordered to pay $281,900 in restitution to 11 victims.

The sentence was a one year upward departure from the Minnesota Sentencing Guidelines, which Judge Bransford said was warranted because Petersen had committed a major economic offense and scheme was sophisticated and required a high degree of planning.

Judge Bransford also gave Castillo a one year upward departure because of the level of her deception and her brazen actions over more than five years, during which she forged more than 400 checks. Castillo was ordered to pay restitution of just over $1.1 million. She pleaded guilty in September to eight counts of theft by swindle, one of the largest embezzlement cases ever prosecuted by the Hennepin County Attorney’s Office.

The Minnesota Department of Commerce, which had suspended Petersen’s license to transact securities because of two earlier instances of unlawful securities transactions, started the investigation in 2013 when they learned Petersen may be back in business despite his loss of license.

What they discovered from his victims, and from an investigator who posed as an investor, is that Petersen placed ads on Craigslist indicating that he had a long history of successful options trading, that he had a strategy where he only invested in low-risk options which provided high payoffs and that he would only be paid from the profits.

All of that was false, and the money clients gave Petersen to invest disappeared through a combination of Petersen’s thefts and losses in the market.

Three people made victim impact statements to the judge and two others submitted written impact statements, which were read by a victim/witness advocate from the county attorney’s office.

“Financially, there has been an impact on me,” Paul Geyen told Judge Bransford. “I had two children in college at the time, I had median income and I had household bills to pay. Jeff is a master manipulator. I’m a trader myself and he is very, very good at putting together false documents to make himself look good. I’m convinced he will do it again. He reached out to me with other plans. That was up until two months ago.”

In court, Richard and Carole Martens gave impact statements about how Castillo’s actions deeply affected not only their company, but also their family. Richard Martens said he had to spend thousands of hours in the past 16 months going over the company’s books to clean up the mess Castillo made by creating an elaborate scheme to hide the money she was embezzling.

Carole Martens said she feels “like an earthquake happened. We are shattered and have been robbed of our normal daily life.” The Martens have had to answer the questions of their grandchildren, ages 9-17, who cannot understand why Castillo, a close family friend, would steal from them.

“To put it in terms a child can understand, $1.3 million represents 56 news cars valued at $25,000 each – a parking lot,” she said.