RAPAPORT... Richard Allen Kay of Zumbro Falls, Minnesota, was sentenced to 200 months in prison for conspiring to distribute more than 1,000 kilograms of marijuana, money laundering and transporting stolen diamonds. Kay, 39, did business in Minnesota as Kay Diamonds and was sentenced on Friday for one count of conspiracy to distribute and possess with intent to distribute marijuana and one count of conspiracy to engage in the interstate transportation of stolen goods, along with 11 counts of money laundering. He was also ordered to pay a $500,000 fine to the U.S. government and $300,000 in restitution to Sterling Jewelers. He was immediately taken into custody.
Kay was charged in a superseding indictment on December 5, 2011, and then he subsequently did not enter into a plea agreement on January 31, 2012 with the U.S. but, rather, offered a "straight plea" to all 13 counts in the indictment.
Following the sentencing, Kelly R. Jackson, the special agent in charge for St. Paul, Minnesota's field office of the IRS, said, "IRS criminal investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of their money. Not only will these criminals go to jail, but the government will seize illegal proceeds through asset forfeiture. IRS criminal investigation is proud to provide its financial expertise as we work alongside our law enforcement partners to bring criminals to justice."
The defendant admitted that from 2001 through 2009, he transported stolen merchandise, specifically, diamonds. To that end, he conspired with an unnamed co-conspirator who was employed at Sterling Jewelers at the time and had access to company jewels, and supplied Kay with diamonds and other jewels stolen from the company. Kay then transported those stolen gemstones to Minnesota. According to the superseding indictment, Kay made about 10 trips between Minnesota and Ohio for that purpose between 2001 and 2009 and transported a total of between 50 to 100 stolen gems.
The judge also sentenced Jamie Allen Davidson, 40, of Rochester, Minnesota for 60 months on one count of conspiracy. He pleaded guilty on January 30 and admitted joining the conspiracy in 2005, and admitted distributing marijuana as well as helping Kay hide assets generated from the conspiracy. Other sentences were passed for conspirators Shawn Robert Milliken, 32, Jason Ray Meek, 37, and Brandon Christopher Lusk, 38, all from Rochester.
The federal government is also seeking forfeiture of hundreds of thousands of dollars worth of assets it claims were the proceeds of Kay's illegal activities, including cash, jewelry, a boat, a luxury automobile and lake shore property in Zumbro Falls. Forfeiture is available if property can be shown to be the result of illegal activity or acquired from the proceeds of illegal activity.