Craig Harbaugh carried himself with all kinds of credibility.
After all, he was a Dodge County sheriff’s deputy with a side business as a federally licensed gun dealer.
He even took potential investors to the bank with him — carrying not only his badge and his duty weapon but also what he said were purchase orders by businesses like Werner Enterprises and law enforcement agencies from Wyoming to Missouri to Tennessee.
He sat down with the investors and the bank officials and convinced them to invest their life savings or lend him millions.
Then he bilked them all out of $11 million — thought to be one of the largest individual embezzlements in Nebraska history. (A Gretna accountant once bilked an Omaha candy and tobacco distributor out of $4.1 million.)
For his theft, Harbaugh, 45, pleaded guilty Monday at Omaha’s federal courthouse to one count of wire fraud. In return for his plea, the U.S. Attorney’s Office for the District of Nebraska dropped 12 other charges against him.
The plea bargain means that Harbaugh faces up to 20 years in prison when he is sentenced in May, though his attorney said sentencing guidelines should result in Harbaugh receiving a seven-year term. Senior U.S. District Judge Joseph Bataillon made no promises on the length of Harbaugh’s sentence but told Harbaugh that he could also be ordered to pay restitution.
His victims include Great Western Bank ($4.9 million in losses) and six acquaintances or neighbors who lost a combined $6 million.
Harbaugh stole $4.6 million from a retired Omaha couple who used to own a business in Fremont. They aren’t holding their breath that they will see any of it back.
“We’re told he has nothing,” said the woman, who didn’t want to be named while the case is pending. “And that the FBI is still working on it.”
Said her husband: “What he did with the money is a true mystery.”
How he did it is true Ponzi. In 2014, Harbaugh, then working as a deputy, started a business called Tactical Solutions Gear. He licensed it as a federal firearms dealer and purportedly had designs on securing law enforcement contracts.
From 2014 through 2018, Assistant U.S. Attorney Lesley Woods said, Harbaugh would cook up documentation to make it look like he had nailed down seven-figure contracts with the Nebraska, Kansas and Wyoming State Patrols for tactical gear and an eight-figure contract with the U.S. Department of Defense for rifle sights.
He went to a handful of businessmen, neighbors and his bank loan officer to secure the funding.
One investor said Harbaugh even invited him to the bank when he showed the purported purchase orders in order to receive a loan.
The former Fremont businessman said Harbaugh would regularly pay him a return of 8% or more on his investments. Federal prosecutors say he was doing so via a classic Ponzi scheme — taking money from one investor to pay another investor to make it seem like they were making money.
“A lot of times, we just said, ‘This is too good to be true,’” the investor said. “ ‘This is too good a deal.’ But he hid behind that badge. Our thought was, ‘If you can’t trust a cop, who can you trust?’”
Private investors weren’t the only ones who trusted Harbaugh. In court, Woods recited the email exchange when a Great Western Bank loan officer discovered the scheme and confronted Harbaugh.
Harbaugh responded: “I’m so sorry. I never meant to deceive you ... I was irresponsible, immoral, criminal and selfish.”
Another couple who lost $1.3 million texted Harbaugh: “Thanks a lot for (losing) all of are (sic) retirement money ... you just kept taking are (sic) money.”
At the time, Harbaugh was still stringing along his investors. “I did not lose your money,” he texted them back. “I filed (bankruptcy) for me and that has nothing to do with what we had. I swear that your money is good. I did not lose it.”
In reality, he did. Law enforcement hasn’t said what Harbaugh did with the money. Some thieves have embezzled millions to spend on gambling or houses or lavish goods. The former Fremont businessman said Harbaugh didn’t give off any signs of extravagance, noting that he drove an ordinary pickup truck.
Now the handful of victims are left to pick up the shreds of their retirement savings. The Omaha couple said the theft has severely affected their retirement.
They were incredulous that prosecutors dropped 12 charges. They were also taken aback when they heard that sentencing guidelines, based on Harbaugh’s lack of record and acceptance of responsibility, could put his term at seven years.
On a bitterly cold Monday, they left the courthouse hoping that he gets more time — and they get more answers.
“It’s a mess,” the woman said with a mix of frustration and contemplation. “That’s life, sometimes.”