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Former Chippewa Falls man allegedly defrauds feds out of $4 million

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MADISON (WQOW) - An area man convicted of defrauding the Pentagon nearly 30 years ago now faces federal charges of doing it again; this time to the tun of $4 million.

Craig T. Klund, formerly of Chippewa Falls, was indicted Thursday by a federal grand jury in Madison.

He faces 19 charges in a scheme to defraud the United States Department of Defense.

Prosecutors say he got money from DOD contracts by creating fake identities and forming multiple shell companies.

The indictment alleges:

Klund created fake identities and formed multiple shell companies that listed fake addresses and fake contact persons in an effort to hide his identity, and that he attempted to engage in bid rigging by using his various shell corporations to bid on the same defense contracts in an effort to make it look like the DoD was receiving multiple competitive bids from different defense contractors, when in fact, the bids were coming from Klund;

Klund supplied nonconforming parts to the DoD, which were being used in important military applications;

Klund failed to deliver parts that he contracted with DoD to provide, but submitted invoices to DoD seeking payment for parts that were never shipped;

Klund lied to various DoD inspectors about his true identity;

Klund used, without lawful authority, a means of identification of real persons in an effort to hide his identity as the person who was actually running his shell companies;

Klund created shell companies after two of his other companies were disbarred from participating in the U.S. government procurement program in 2015;

In 2018, Klund relocated his business operations from Chippewa Falls to South Dakota in an effort to conceal and evade his criminal activity from the DoD;

Klund took steps to conceal his criminal activity from the U.S. government by not reporting any of his DoD gross receipts to the IRS; and

Klund engaged in money laundering as a way to disguise his receipt and control of the DoD proceeds paid to his shell companies. 

Klund was sentenced to two years in prison in 1991 on a federal charge of bilking the DOD out of $251,000 when he was the president of Defense Electronic Systems in Bloomer.

If convicted, Klund faces 20 years in federal prison on each wire fraud charge, five years on each false statement charge, 10 years on each money laundering charge and a minimum of two years on each identity theft charge.

Keith Edwards

Keith Edwards is the 5, 6 and 10 p.m. anchor at News 18.

Keith grew up in the Village of Lake Hallie, attending Chippewa Falls schools where he started pursuing his broadcasting education.

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