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Prosecutors: Iowan to plead guilty in wire fraud case with Nevada victims

IOWA CITY, Iowa — Prosecutors expect an Iowa man charged with swindling investors out of more than $800,000 in phony mining and gambling ventures to plead guilty to wire fraud and making false statements today, but the defendant said Monday he would not appear in court.

Donald K. Washburn, 62, of Cedar Rapids was expected to enter the guilty pleas as part of a deal in which he will agree to pay at least $821,000 in restitution, assistant U.S. Attorney Matthew Cole wrote in a court filing last week. Washburn has agreed to forfeit a golf cart and trailer, a Ford truck, a diamond ring and $325,000 in cash, Cole wrote.

Washburn would face a maximum of 25 years in prison under the deal, in which the government would dismiss 47 other counts of fraud, money laundering and false statements.

But in a brief phone interview, the defendant with a history of fraudulent behavior said he would miss today’s court hearing because he will be in the hospital getting medical treatment for his heart. He said he planned to try to back out of the plea agreement, which he said he “started to sign” before having second thoughts.

“99.9 percent of the stuff he says is not true and I’m fighting it all the way,” Washburn said. “I’ll take my chances in court.”

His attorney, privacy advocate and former Republican U.S. Rep. Bob Barr of Atlanta, did not immediately return a phone message.

An indictment filed last year says Washburn duped an unidentified investor from Wisconsin out of nearly $500,000 by convincing him to invest in a dice game he claimed he was developing to sell to casinos. Washburn’s son was a business associate of the investor and told the man that the television show “60 Minutes” was already planning a segment on the game, which would be highly profitable, the indictment said.

Washburn also convinced investors from Nevada, Alaska, Ohio and New York to give him more than $300,000 after he started a company and fabricated documents to create the appearance he was involved in legitimate gold and iron mining ventures in Colorado, Nevada and Australia, the indictment said.

In all cases, prosecutors say, Washburn promised a high rate of return but never intended to follow through and instead used the money for his family’s benefit. When investors demanded their money or asked about the status of the deals, Washburn came up with a story for the delays, e-mails show, generally that the ventures were more complicated than he anticipated but he was working hard to get the money and would have it soon.

“I received confirmation of the treasury notes being issued and hope to have them by tomorrow, but don’t know. Maybe that’s wishful thinking,” Washburn told one of the mining investors, in one of many such false assurances quoted in the indictment.

The phony investment schemes came as Washburn was under federal supervision after serving a three-year prison term on a 2005 conviction for wire fraud and money laundering in connection with schemes in which he defrauded investors who gave him money to obtain a DNA research grant and to develop a new dice game. He did not disclose his prior conviction to investors.

The wire fraud count to which Washburn has agreed to plead guilty relates to a $60,000 money transfer he received in 2009 from an Alaska investor who gave him money for a mining venture, according to last week’s court filing.

Prosecutors say Washburn also failed to disclose his business dealings to the probation office on monthly supervision reports in which he was supposed to detail his income and expenditures. Under the count to which he’s expected to plead guilty, Washburn failed to disclose his receipt of the $60,000 transfer, falsely said he did not have checking and credit card accounts and did not disclose spending that included a $15,000 real estate investment and $1,000 at a western-themed clothing store.

Under the plea deal, Washburn also agrees to give up any ownership interest in his Cedar Rapids home. Before he was indicted, prosecutors started a civil proceeding to seize the home after an FBI investigator said he used an office, computer and fax machine there to launder money and commit wire fraud. Washburn’s wife, Dolores, claims she is the sole owner and the home cannot be forfeited because of her husband’s acts. A trial has been set for this spring to determine whether she can keep it.

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