Founder of PureChoice on Trial for Federal Fraud ChargesPrint Article
- Posted on: Oct 20 2016
Bryan Reichel, founder of PureChoice — deceptive or duped?
Business lawsuits involving accusations of fraud can be complicated and confusing. It is sometimes difficult to decipher who is lying and who is telling the truth. On the one hand, there is a successful CEO, who is alleged to have committed fraud to develop or maintain a lavish lifestyle. While, on the other hand, there is an accuser who stands to gain money and power by overthrowing the existing kingpin. If you find yourself accused of fraudulent behavior, it is essential that you engage the services of an experienced business attorney who will untangle the threads to find out where the deception begins and where it leads, and to vigorously defend you from your accuser.
Two Opposing Views of Bryan Reichel
Bryan Reichel, 61, founder and CEO of PureChoice, a Minnesota company that developed and sold air- monitoring equipment, has been described by his lawyer as a visionary who managed to survive the financial crisis, but was then evicted from his own company by greedy investors. The prosecuting attorney, of course, has an entirely different point of view. He presented Reichel as a fraud who lied to the investors who helped him establish his new business in order to retain the profits for himself.
According to the federal grand jury that indicted Reichel in 2014, he committed seven counts of wire fraud and lied to his investors. In 2015, a grand jury added five more charges based on his alleged attempts to hide his assets in order to defraud the bankruptcy court. The federal prosecutor, in addressing the jurors, claimed that “This case is all about self-dealing.”
The Specific Allegations
When Reichel was soliciting investments, he touted PureChoice as a company on the cusp of success. Indeed, his company initially drew attention from some big Minnesota companies, such as Honeywell and 3M. It is alleged, however, that he was lying about his company’s success and that PureChoice was already losing money at the time. It is further alleged that, in a Ponzi-like scheme, he was using new investment money to pay off old investors, as well as to fund his lavish life style, which included a large mansion, many posh vehicles, pricey trips, and an expensive gun collection. From 1992 until 2011, his investors lost a net total of approximately $25 million. In addition, by 2010, his company had racked up $40 million in debt.
Unsurprisingly, at trial, Reichel’s attorney presented an entirely different story. He described Reichel as an innovative entrepreneur who won the support of many well-informed corporate executives who invested millions of dollars in PureChoice. Some were even guarantors of PureChoice’s debt. Among the investors in PureChoice were a father-and-son team, George and David Anderson, heirs to Crown Iron Works. While the government alleges that they were the ones who lost the most from Reichel’s scheme, approximately $12.3 million, Reichel’s attorney presents a completely different series of facts.
Reichel’s attorney notes that George Anderson believed, after the Sept. 11 attacks, that Reichel’s technology could be used to save the U.S. power grid from an electromagnetic pulse attack. Armed with this idea, Anderson traveled to Washington to testify before a congressional committee about “his” proposed solution to an imminent threat. Having started investing in PureChoice in 2003, he and his son eventually took over the company and its intellectual property, ousting Reichel in 2010.
In 2011, Reichel filed for bankruptcy while fighting a lawsuit in which Anderson was seeking to recover a $1.5 million loan from him. If this all seems complicated, hold onto your hats. Anderson’s attorney says that Reichel moved family finances and failed to disclose significant amounts of personal property when he filed for bankruptcy protection. Reichel’s lawyer, on the other hand, says this was the result of poor advice he was given by a previous attorney. Reichel also accuses Anderson of falsely reporting to the bankruptcy court that Reichel had hidden gold bars and stashed substantial amounts of money in the Cayman Islands.
It is clear from the complications of a case like this why it is so important to retain an experienced business law and litigation attorney if you become entangled in a lawsuit alleging fraud. It is unlikely that anyone without such a background could extricate him or herself from such a situation.