SIOUX FALLS – The Sioux Falls businessman who defrauded investors in a scheme to build an $11 million fish farm near Brookings has been sentenced to nine years in federal prison.
Tobias Ritesman, 42, was also ordered to pay back nearly $700,000 in restitution.
United States Attorney Ron Parsons announced that Ritesman, who was convicted of 10 counts of wire fraud and eight counts of mail fraud, was sentenced Monday by U.S. District Judge Karen Schreier.
Ritesman was sentenced to 108 months in federal prison, followed by three years of supervised release, restitution in the amount of $680,000, and a special assessment to the Federal Crime Victims Fund in the amount of $1,800.
Ritesman and co-defendant Timothy Burns were indicted by a federal grand jury on Jan. 9, 2018. Ritesman filed a petition to plead guilty on April 15, 2019. The conviction stemmed from incidents beginning on or about May 3, 2016, and August 1, 2017.
“This is an appropriate federal prison sentence for what was an ambitious and surprisingly audacious fraudulent scheme,” Parsons said. “A lot of South Dakotans lost a lot of money as the result of the web of lies spun by this defendant.”
Ritesman started a company called Ritesman Enterprises, Inc. (REI) in approximately 2012. Ritesman had three companies that operated under REI’s umbrella: Tinkers and Thinkers, Tiger Consulting, and Global Aquaponics, Inc. Global Aquaponics was active in pursuing investments for a proposed aquaponics facility to be built in Brookings. The purpose of this facility was to raise fish and produce. In approximately June of 2016, Ritesman then formed SD Food Security, LLC (SDFS), which was also involved in the aquaponics project.
Burns owned and operated multiple businesses in the Brookings area: Oakwood Equity, Concrete Contractors (CCI), and Multiply. Burns held these companies under a parent company called Syntech.
The fundraising plan for the aquaponics facility in Brookings was that Global Aquaponics would contribute $5.6 million to the project and own 51% of the facility. SDFS would contribute $5.4 million to the project (raised primarily by selling investment shares) and own 49% of the facility.
The Private Placement Memorandum (PPM) offering an investment opportunity in the aquaponics facility was dated June 20, 2016, and the offering expired on June 19, 2017. It stated that the proposed facility was modeled after an aquaponics facility in Maryland.
The PPM said that Global Aquaponics board members included some individuals with aquaponics experience, including an individual involved with the Maryland facility. In addition to describing the project, it identified the specific 40-acre parcel of land near Brookings that would be purchased for the project. The PPM detailed how it would use the proceeds, including spending nearly $1.2 million for purchasing the property.
Between approximately May 3, 2016, and August 1, 2017, Ritesman and Burns received a total of $1,030,000 in investments in the project from 34 investors. Bank records showed that the money from investors was deposited into four different accounts. Ritesman and Burns were each stealing investor money and using it for their own purposes.
Co-defendant Timothy Burns’ sentencing is set for Monday, July 22. This case was investigated by the Federal Bureau of Investigation. Assistant U.S. Attorney Ann M. Hoffman prosecuted the case.
Ritesman was immediately turned over to the custody of the U.S. Marshals Service.