Paul Erickson, Russian Agent Maria Butina’s Boyfriend, Indicted for Fraud
The federal indictment in South Dakota alleges that he ran a criminal scheme from 1996 to 2018 using a chain of assisted-living homes.
Paul Erickson, the American political operative and boyfriend of admitted Russian agent Maria Butina, has been indicted by a federal grand jury in South Dakota on charges of wire fraud and money laundering.
The U.S. attorney for the district of South Dakota is handling the prosecution, which is separate from the case that was lodged against Butina in Washington, D.C.
Erickson, 56, was arrested on Tuesday and entered a plea of not guilty at an arraignment, according to the court filings. His attorney, Clint Sargent, said in a statement: “Mr. Erickson is anxious to let the criminal justice process play out and believes a story different from the Government’s will emerge.”
The indictment alleges that Erickson ran a criminal scheme from 1996 to 2018 using a chain of assisted living homes called Compass Care. Erickson also allegedly defrauded investors through a company called Investing with Dignity that claimed to be “in the business of developing a wheelchair that allowed people to go to the bathroom without being lifted out of the wheelchair.” The indictment says he also ran a fraudulent scheme that claimed to be building homes in the Bakken oil fields of North Dakota.
His arrest comes after several months of investigation by federal and state law enforcement officials, according to court documents and individuals with direct knowledge of the probe. Two individuals who spoke to The Daily Beast over the last five months said they were contacted by FBI agents about Erickson and his businesses.
Gary Byler, an attorney in Virginia Beach, spoke with his longtime friend Erickson throughout those investigations, telling The Daily Beast in October that Paul was “a great American” and “knew what was coming down the pipeline”.
“I actually texted him yesterday and told him not to quit his day job,” Byler said. “He texted back: ‘I don’t have a day job.’”
“Power is an aphrodisiac in politics. Paul always attracted people around him,” Byler said in a recent interview. “He is great fun to be about.”
Erickson, a well-known conservative operative who shuttled between D.C. and South Dakota, struck up a relationship with Butina, 29, in 2013. As The Daily Beast has reported, he dressed up as Rasputin to her flame-haired Empress Alexandra at a 2016 birthday party where vodka flowed through an ice sculpture of a bottle imprinted with the Soviet hammer and sickle.
The couple, who lived together in South Dakota, had some kind of business together. They were listed as the sole officers of Bridges LLC, a company registered in the state in February 2016, though it’s unclear what it did or how it operated.
Butina, an avid activist for gun rights in Russia, attended American University in the U.S. and worked closely with Russian central bank official Alexander Torshin to influence American politics, according to court records.
Throughout the Butina court documents, federal investigators mention a “U.S. Person 1”—an individual Butina worked with, dated and used to make connections with “an extensive network” of right-wing political figures. That person, who documents say is closely tied to the National Rifle Association, is was largely believed to be Erickson.
Butina pleaded guilty in December to a conspiracy charge as part of a cooperation agreement with federal prosecutors and is likely to be deported. She is not mentioned in the South Dakota indictment.
Even before he was charged, Erickson was dogged by allegations of financial shadiness. As first reported by The Daily Beast in July, individuals who have sued Erickson alleged in court documents that he and his companies failed to pay back loans. Some say he duped them into investing into what appeared to be nonexistent companies. Others allege Erickson used their money for personal expenses. Erickson has been sued in California, Virginia and South Dakota.
Michael Barnes, an entertainment attorney in Los Angeles, filed a suit in 2014, claiming Erickson through Compass Care persuaded him to invest $50,000 in a real-estate project in the Bakken oil fields. The lawsuit says Erickson failed to repay Barnes by the promised due date. A California court ruled Erickson committed fraud against Barnes and ordered him to pay about $350,000 in compensation.
In that deal, Erickson solicited investments from attendees at conservative political events by laying out terms that promised high returns, according to three people with knowledge of the deal and court records reviewed by The Daily Beast. Erickson, who represented himself as a real estate developer, planned to use his company in North Dakota to set up a transaction in the Bakken region, the sources said. But Erickson doesn’t appear to have planned on carrying out the deal, according to a 2015 judgement by a California court. And the company he represented doesn’t appear to have ever existed, according to a review of public records by The Daily Beast.
In an email in November of 2013 to a potential investor for the Bakken deal, Erickson asked for funding for what he called his “new real estate development venture” in North Dakota.
“I’m extremely proud of the work of our development team as together we find new ways to service the office and housing needs of this new American gold rush,” Erickson wrote. In the email, Erickson called his new business the “Bakken oil fields” and said it was set up to capitalize on the boom in North Dakota.
“Due to your interest in my work and in consideration of past kindness, I would welcome your investment of any amount you choose (up to $100,000),” the email said.
Erickson noted in the email that any investment would be governed by two conditions. One, that returns would be repaid by February 18, 2014 and two, that he would repay the full amount of investments if the deal did not materialize. Erickson garnered at least $50,000 from the email exchange and did not pay any of it back, according to the judge’s decision on the case.
Two individuals familiar with the deal said he told investors he owned several parcels of land near Williston, North Dakota and would set up a transaction between two of his companies. In a complaint filed in a lawsuit in 2015, one of the investors alleges Erickson planned to use a company he controlled to sell undeveloped North Dakota land it owned to a second company Erickson controlled.
“Such a transfer would result in profits for Defendant, as owner of the first seller company, on account of a secured lender giving a higher valuation to the land, on account of various entitlements acquisitions which were part of the Transaction,” according to the complaint.
One of the companies he represented while soliciting investments was Northern Plains Holdings, LLC, according to investors and people familiar with the deal. The North Dakota secretary of state’s office told The Daily Beast it did not have a record of such a company connected to Erickson. It’s unclear what other company Erickson planned to use. The Daily Beast also checked property ownership data for North Dakota and could not find evidence Erickson ever owned land in Williston.
In another case, conservative media activist L. Brent Bozell III, founder of the Media Research Center, also sued Erickson’s Compass Care Inc. in Virginia in 2007. Bozell, who invested $200,000 in Compass Care, alleges that Erickson failed to pay him back. At one point Erickson wrote Bozell a check to repay him for his investment. The bank rejected it, claiming insufficient funds, according to court documents.
At one point, Erickson asked individuals to invest in a company that promised returns for what he claimed was a high-tech patent for a wheelchair. In court documents, Erickson admits to owing several of those who invested. Byler, who is listed as Erickson’s lawyer on several of his companies’ registration documents, said he was involved with the wheelchair patent deal and made “a little capital.”