Dakota County Attorney James Backstrom announced that Paul Richard Scharf, age 42 of St. Paul, has been charged* with eight counts of Theft by Swindle and eight counts of Embezzlement of Public Funds (all felonies) in connection with the alleged theft of over $64,500.00 using a Ramsey County credit card from July 2017 through August 2019. At the time of these alleged thefts, Scharf was employed by Ramsey County.
The details set forth in the criminal complaint filed today include the following:
In May of 2019, Menards Corporate contacted the Minnesota Bureau of Criminal Apprehension regarding Merchandise Credit Checks (MCC) being sold on eBay that were associated with purchases that had been made using a tax-exempt number associated with Ramsey County. The retailer explained that when merchandise is returned to the store, the value can be placed on a MCC, which can then be used to purchase other items in the store later, similar to a gift card. The retailer initially found 30 MCCs that had been sold on eBay. All 30 MCCs were from returns on purchases originally made on a credit card used by Scharf that was issued to him by Ramsey County, who was his employer. Scharf also used Ramsey County's tax exempt ID number for the purchases. Scharf was observed in several videos as the individual making the original purchase, as well as later returning items on several occasions. Other individuals were also observed making some of the returns. When questioned by BCA agents, two of the individuals observed making some of the returns admitted to making them at Scharff's request and gave him the MCCs they had received.
Scharf's phone was searched pursuant to a warrant and contacts for two people who were selling the MCCs was located on it. The two people who had been selling the MCCs stated that they were getting the MCCs from an individual they knew as “Pauley". Agents searched the phones belonging to the two and located a contact for a “Pauley" at a phone number known to belong to Scharf. More than 60 text messages were located offering to sell or trade MCCs at 50% of their face value, often on eBay. One of the people interviewed had four MCCs on them at the time of the interview. All four were traced to purchases made by Scharf using his Ramsey County issued credit card. The witness stated she had gotten them from somebody who worked for Ramsey County. She also said she had met “Pauley" on Craigslist several years earlier and that “Pauley" would periodically call her or the other individual and ask if they wanted to purchase the MCCs.
Approximately 123 completed eBay auctions between October 2017 and July of 2019 for Menards MCCs were located. Some of the auctions included more than one MCC. All of those auctions had been conducted by the two individuals questioned in this case. All of those MCCs were issued on returns from purchases made on Scharf's County credit card. Agents were able to trace all of those MCCs and determine when the original purchase was made, what was purchased, how it was paid for, what was returned from the original purchase and when. Agents noted that sometimes it was only minutes between the original purchase and the subsequent return. A total of 265 MCC's associated with alleged illegal transactions involving Scharf's County credit card totaling over $53,500 were found to have occurred between October of 2017 and December of 2019.
Text messages showed that Scharf was also selling Target gift cards to the same woman who had been purchasing the MCCs from “Pauly" at 50% of face value and later selling them on eBay. Target receipts were located during the search of Scharf's residence. Agents determined that Target gift cards recovered from the witness, were generated on returns issued from purchases made on Scharf's County credit card.
Agents also located 21 pawn transactions between January 1, 2017 and February 1, 2019 involving Scharf and a witness. In each case an item was purchased from a store using Scharf's County credit card was returned, in most cases on the same day the purchase was made.
When questioned, Scharf admitted he was employed by Ramsey County, had been issued a County credit card and acknowledged it was not allowed to be used for personal expenses. He identified indivduals who would help him out sometimes, but claimed he did not know the other people who had been confirmed as selling the MCCs on eBay. Scharf clamed any MCCs he had gotten from returns had been used to make later purchases on behalf of the County. Ramsey County was unable to locate a large number of tools and equipment that had been purchased using Scharf's County issued credit card.
The total loss from these alleged illegal activities involving Scharf's Ramsey County credit card was approximately $64,800.
Additional facts pertaining to this case can be found in the criminal complaint at Criminal Complaint Search.
Backstrom commented: “Any theft of government funds is a serious crime which victimizes not only the governmental agency but also all of its taxpayers."
Backstrom thanked the Minnesota Bureau of Criminal Apprehension for their thorough investigation of this matter. The Dakota County Attorney's Office is handling as a conflict for the Ramsey County Attorney's Office.
Scharf is being summonsed to court and will make his first appearance on these charges in the next several weeks. If you have questions, contact James Backstrom at 651-438-4440.
*Criminal charges are not evidence of guilt. A defendant/suspect is presumed innocent unless and until proven guilty.