Steven D. Blumhagen, 74, of Buffalo, has been sentenced to five years in federal prison after pleading guilty to wire fraud, the U.S. Attorney’s Office for the Western District of New York announced on May 21, 2025.
The case marks Blumhagen’s third federal fraud conviction.
Details of the fraud scheme
Between April 2016 and January 2020, Blumhagen solicited $400,000 from three investors under false pretenses. He claimed their funds would support ventures such as:
- Legal marijuana operations
- Real estate developments
- Investment technology initiatives
Instead, Blumhagen used the money for personal expenses and to pay off earlier victims, operating a classic Ponzi-style scheme. He also falsely claimed his children owned a company used to attract investor funds—they had no involvement or knowledge.
At least one victim withdrew retirement funds, incurring steep penalties.
A history of deception
Blumhagen has a long criminal record of financial fraud:
- 2006: Pleaded guilty to conspiracy to commit mail fraud tied to a fake golf course investment. He was sentenced to 57 months in prison and ordered to repay over $10 million.
- 2018: Pleaded guilty to bank theft in a $1.4 million bond scheme. He was sentenced to time served and ordered to repay over $1.2 million.
- He was on pre-trial release for the 2018 case when he committed this latest offense.
DOJ: Financial fraud will not go unpunished
“This sentence sends a clear message,” said U.S. Attorney Michael DiGiacomo. “Repeat offenders who defraud hardworking Americans will be held accountable.”
The case was investigated by the FBI Buffalo Division, led by Special Agent-in-Charge Matthew Miraglia.
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