Nearly 3½-year term for ‘treacherous’ Minnesota woman who stole $2M from friend’s family business

A prison term of nearly 3½ years has been handed down in a Minnesota courtroom to a woman who exploited her longtime friendship with her employer and embezzled more than $2 million from a Hutchinson company, then used the money to cover “exorbitant credit card bills,” her son’s house payments and funding of her husband’s off-road racing supply business.

Jennifer Lee Rath, 53, was sentenced this week in U.S. District Court in St. Paul after pleading guilty to mail fraud in connection with her scheme that ran from August 2013 until December 2019 while she was the financial controller for R&R Excavating, a family-owned highway construction company in Hutchinson.

The sentence for Rath, of Hutchinson, also includes three years of supervised release and an order to repay all the money she stole.

“Everyone knew that I perceived Jennifer to be a part of my family,” read a victim impact statement filed in court on behalf of the company, which is owned by Brent Reiner. “I trusted her wholeheartedly. Having someone so close to me and my family be so treacherous has literally pulled the rug out.”

Judge Jerry Blackwell went beyond the prosecution’s request for a sentence of slightly more than three years in prison and two years’ supervision and explained that he was particularly troubled that Rath took advantage of a longtime friend who trusted her with his business.

Prosecutors in their written argument to Blackwell before sentencing pointed out that Rath used the company’s money to pay for vacations and her “exorbitant credit card bills. She also floated her husband’s racing business, operated an apparent hobby farm, and paid the mortgage on her son’s home.”

The U.S. Attorney’s Office said in a statement Thursday that “because of Rath’s embezzlement, the company’s business and reputation suffered. ... Employees lost their jobs, [R&R] could not pay vendors on time, and its credit suffered.”

Defense attorney Daniel Repka said on Friday that his client “accepted responsibility for her actions even before the government charged her with wire fraud. She pled guilty at the first hearing in furtherance of her cooperation with the government’s investigation.”

That said, Repka continued, “while Ms. Rath respects the court’s sentencing decision, she is exploring an appeal to the Eighth Circuit Court of Appeals to determine whether a 41-month prison sentence fairly accounts for her contrition and lack of criminal history.”

According to court records:

Rath was responsible for managing the highway surfacing and repair company’s payroll, accounts receivable, accounts payable, company credit cards and corporate bank accounts.

During her six-plus years of stealing, Rath cut more than 400 checks that appeared to cover the company’s expenses but used the money for the benefit of herself and her family. Her scheme was made easier because she had a stamp of the owner’s signature that she used when he was in the field tending to projects.

She also processed electronic fund transfers from the company’s bank accounts to pay personal expenses and improperly charged personal expenses to company credit cards.

Rath covered up her many illegal transactions totaling $2.018 million by deleting vendors from company records, faking invoices and altering checks.

The scheme began to unravel in 2019, when R&R’s owner spotted a $20,000 electronic fund transfer that he failed to recognize.