A Lewiston business lost millions in a scam. Will it ever see that money again?

Jul. 30—LEWISTON, Minn. — A Wabasha woman was scammed into stealing millions from her place of employment.

Now, she's sentenced to pay it back.

In April, Sharon Schmalzriedt, 61, pleaded guilty in Wabasha County District Court to a felony count of theft. She admitted to diverting funds from National Chemicals Inc., where she was a bookkeeper for the company's Lewiston office. In March 2023, she was fired for gross negligence after the company noticed financial irregularities.

Schmalzriedt had been diverting company funds for years, according to the criminal complaint filed in the case.

The complaint said she was having marital problems and, in October 2019, began an online relationship with a man identifying himself as Erik Lockwood.

According to message transcripts, Lockwood and another person who identified as Lockwood's attorney told Schmalzriedt that Lockwood was owed $7 million for work he did in Dubai. They told Schmalzriedt that Lockwood needed to borrow money to access the money he was owed, transcripts show.

Schmalzriedt told an agent with the Minnesota Bureau of Criminal Apprehension she initially sent her own money and money she said she had permission to borrow from the business. Messages show that Schmalzriedt was aware she was stealing from National Chemicals Inc. and causing the company financial difficulties.

On July 3, Schmalzriedt was sentenced in the case.

Rather than facing a prison sentence, Schmalzriedt was sentenced to 1,000 hours of community service and to pay restitution — $3,751,487.06.

"It's a large, eye-popping number," Wabasha County Attorney Matthew Stinson told the Post Bulletin.

Stinson said it's likely that this is the largest scam the county has seen — and one of the most unique ones.

In other cases, scammers tend to take the money to spend it on their own expenses, Stinson said. Schmalzreidt's case is different because she passed the money onto other scammers. Stinson said the Minnesota Bureau of Criminal Apprehension tracked the payments to somewhere in Africa.

Even if a defendant is ordered to pay restitution, the victim may not get paid, according to the Minnesota Department of Public Safety . It depends on the defendant's resources, the county's collection strategies and the efforts of the probation officers.

According to Stinson, the defendant and their probation agent decide on the size of the installments and how frequently they will be paid.

"But when a number is this large, it's unlikely that the amount can get paid," he said. "Ultimately, she will be required to pay what she can pay based on her income at the moment."

If Schmalzriedt were to pay the full restitution in her probationary period, it would cost her more than $750,000 per year.

Individuals who are required to pay restitution must do it during their probationary term, which courts can extend, he said.

"Obviously people who are stealing quite often don't have a lot of means themselves," Stinson said, speaking about such cases in general. "What they do earn is needed to pay rent and car payments and insurance, so it may be a lot of small payments."

If the individual can't pay the restitution, the court can order the restitution to be docketed as a civil judgment, according to a report by the University of Minnesota Law School. "This makes the order enforceable by any civil means of collection, including garnishing a person's wages. It also places a lien on any property owned by the person owing restitution," the report said.

In Schmalzriedt's case, no judgments had been filed as of July 26.

While scams of this scale don't occur often, smaller scale scams are happening more often than people think, said Wabasha County Sheriff Rodney Bartsh.

"People would be surprised at how much money is being sent overseas in these scams," Bartsh said. "Most of the time, people are too embarrassed to ever report it to anybody."

According to the FBI's 2023 Internet Crime Report, individuals lost $12.5 billion in scams around the globe. Out of the 880,418 total complaints, 521,652 came from the United States.

Minnesota ranked 18th among states for the size of its total losses, reporting $193,949,414.

Bartsh said there's likely a significant amount of losses that aren't being reported.

If someone was scammed out of a few hundred dollars, Bartsh said they may opt out of reporting it because it doesn't seem like a big deal. But, the hundreds of dollars will add up.

"There's probably thousands of dollars a day that are leaving our county," Bartsh said, "and nobody will report it."

Scams are evolving every day, making them harder to detect, Bartsh said.

"It's ever-changing," he said. "These scammers have all the time in the world to come up with new ideas and new things and new ways to figure out the person who's going to get scammed."

For businesses, Bartsh said they should enact "safeguards" to ensure their financial property is secure. By allowing two or three people to be aware of any account or transaction, Bartsh said it's important that "no one person has total control of your purse strings."

Bartsh said younger people, who are used to questioning someone's intentions, need to be keeping an eye out for older generations.

According to the 2023 ICR, individuals ages 29 and younger reported losing $401.4 million while those over 60 reported $3.4 billion in losses.

"Your parents, they grew up in a different environment — a trusting generation," he said. "Today, it's hard to trust anybody in regards to somebody being nice to you. ... (Older people) just don't want to buy into the fact that we live in a different world today."

National Chemicals Inc. and Schmalzriedt did not respond to requests for comments.