A 62-year-old Twin Cities man convicted of fraud in 1993 has been accused of running several more wide-ranging schemes that bilked at least $20 million from people, including golf pro Phil Mickelson.
A federal indictment unsealed Thursday in Minneapolis alleged Michael Joseph Krzyzaniak, also known as Michael Joseph Crosby, has been soliciting investors since 2003 for projects that included a golf resort in Desert Hot Springs, Calif., and a NASCAR-style racetrack in Elko, Minn.
Investors described Krzyzaniak, whom they knew as Crosby, as a larger-than-life personality who traveled in chartered jets, drove a $130,000 Mercedes and relaxed at a California beach house he rented. He didn't tell investors about his previous mail fraud conviction, or that his business projects were not viable because of environmental issues, the lack of regulatory approvals or other reasons, the government alleged.
To lure investors, the government says, Krzyzaniak promised substantial returns and falsely claimed to have celebrity endorsements that would ensure the projects' success. He allegedly spent some of the money he raised to keep projects afloat or to make "lulling" payments to investors. But the indictment says he spent more than $6.1 million of investor funds on himself.
Mickelson got drawn into Krzyzaniak's failed project in Desert Hot Springs. The golf pro designed the Palmwood golf course for the planned resort complex. But a judge halted it after two environmental groups raised concerns about the effects on the area, which is near Joshua Tree National Park.
Mickelson's attorney, Glenn Cohen of Jacksonville, Fla., declined to comment Thursday.
Krzyzaniak also pitched alternative energy projects in Hartsel Springs, Colo., and Internet terminals in various airports and golf courses. He's been racking up civil judgments for tens of thousands of dollars for years.
Furtive glances in court
Wearing a wrinkled green T-shirt and gray slacks, Krzyzaniak seemed dazed as he stood Thursday before U.S. Magistrate Judge Steven Rau in St. Paul. He exchanged furtive glances with two men in the gallery who appeared distraught. They declined to comment on their relationship to him.
Rau ordered Krzyzaniak held until a bond hearing next week, and appointed a public defender to represent him. Krzyzaniak said he owns no property, stocks or bonds and has "a few hundred dollars in the bank" plus the $300 he carried at his arrest Wednesday. He said his 2004 Silverado truck has a small loan against it.
Krzyzaniak is originally from Richfield and has lived in Edina, Minnetonka, Minnetrista and Mound. It's unclear where he currently resides. He faces 20 counts of mail fraud and wire fraud, three counts of money laundering, four counts of income tax evasion for the years 2004-2007, and four counts of willful failure to file a tax return. If convicted, he could spend the rest of his life in prison.
His business entities include Landmark Properties, Landmark Holding Co., Landmark Midwest, Landmark Energy Group, Landmark Cyber Tech, Landmark Colorado, Coyote Canyon Group, Generation Energy Group, 325 Wise, Crosby and Associates, Palmwood Commercial and Hartsel Springs Solar.
"This guy is evil and it's good he's off the street," said Paul Breckner of Wayzata.
He and his father, Ron Breckner of Prior Lake, wouldn't say how much money they lost in their investments in Palmwood, only that it was "a lot," and that Palmwood alone probably affected dozens of investors around the Twin Cities.
The Breckners said they discovered a few years ago that Krzyzaniak was mishandling funds. Ron Breckner took control of Landmark Midwest and filed for Chapter 7 bankruptcy liquidation in 2008, Paul Breckner said. The Breckners now own 884 acres of land that was going to be Palmwood in Riverside County. They're working on an alternative energy project.
Krzyzaniak's first trip through the federal courts began in 1986, when he was running a Bloomington coin dealership called Can-Am Mint Trading. Krzyzaniak and some associates sold overpriced silver medallions on the promise that they'd increase in value, and a bogus claim that some of the money would be used to build a 70-acre veterans' park next to Mount Rushmore National Memorial in South Dakota.
Convicted in absentia
Krzyzaniak was convicted of mail fraud in absentia after he skipped bail and didn't appear for trial. One witness, retired Air Force Gen. Chuck Yeager, the first pilot to break the sound barrier, testified that Krzyzaniak tricked him into making a promotional videotape for the park. Elderly coin buyers said they lost their life savings.
U.S. District Judge Donald Alsop sentenced Krzyzaniak to 20 years in prison in 1989. The U.S. Supreme Court reversed the conviction, saying under the rules at the time, a trial in absentia could only take place if the defendant disappeared after the proceedings began.
Krzyzaniak was indicted again and pleaded guilty in 1993 to aiding and abetting mail fraud and was sentenced to three years in federal prison. A retired postal inspector who worked on that case said prosecutors were hamstrung because many of his victims had died.
dbrowning@startribune.com • 612-673-4493 pmcenroe@staribune.com • 612-673-1745 jennnifer.bjorhus@startribune.com • 612-673-4683
