Heart surgery changes plea plans for Cedar Rapids man accused in mining scheme

A Cedar Rapids man set to plead guilty Tuesday in federal court to wire fraud, as part of a mining scheme, underwent emergency heart surgery Monday, causing his hearing to be continued.

According to a plea agreement, Donald K. Washburn, 62, was going to plead guilty to one count of wire fraud and one count of making false statements on Tuesday in U.S. District Court. He is accused of being involved in a mining scheme and cheating investors and lenders out of more than $285,000.

Washburn was originally charged last year in a 23-count indictment which included wire fraud, money laundering and making false statements to the U.S. Probation Office.

U.S. Magistrate Jon Scoles granted the continuance Tuesday after receiving a letter from Washburn's doctor in Iowa City and a motion to continue from his attorney.

Washburn has a history of heart problems and was admitted to the hospital Jan. 13. He underwent a two-hour procedure for a coronary blockage Monday, according to court documents. He remained in the hospital Tuesday and it was unknown when he would be released.

If a plea isn't entered before Washburn's trial date, Feb. 13, the trial will proceed, Scoles stated in the order.

According to the indictment, Washburn would create the appearance that he was involved in the mining business and solicit funds for mining activity from prospective investors and lenders. Washburn would show investors mining related documents and contracts but some of the mining companies were in default, a false account was set up in a mining company name or he incorporated a mining company name in Iowa and listed his residence as the business office location.

Washburn told investors their money would be used to purchase mines or ore, operation of mines and/or transportation of iron ore, gold, or other minerals from mines, according to the indictment. He also promised investors they would receive high rates of return on their investments and loans but he instead used the funds for his own benefit or for the benefit of his family.

According to the plea agreement, Washburn made several wire transactions in 2009 and 2010 as part of the scheme. He also made false statements to the probation office in September 2009. He claimed to not have certain checking/savings accounts, failed to disclose a wire transfer receipt, failed to disclose several expenditures of more than $500, and falsely claimed he didn't open any new checking or savings accounts when he had.

If Washburn pleads guilty, he faces up to 25 years in prison and a fine up to $1 million or the greatest of - twice the gross gain to the defendant resulting from the offense or twice the gross loss resulting from the offense, according to the plea agreement. He will also pay at least $821,705 in restitution.

Washburn, as part of the plea agreement, will also forfeit a diamond ring, any interest in Iron Ore International of Nevada or Iowa, any interest in Dibocca - a dice game, a golf cart and trailer purchased July 2010 from Young's Golf Cars, a Ford B tractor, interest in the real property located at 10401 Hawks Haven Road and a money judgment of $325,375.