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A Little Falls business owner celebrated by the federal government just a year ago could be headed to prison after pleading guilty to defrauding two lenders. 

In a St. Paul federal courtroom on Thursday, Adelle Starin, who owns Baby’s On Broadway, admitted that she invented a phony supplier and created fake invoices to secure $9 million in financing from Liquid Capital Enterprises Corp. and Slope Tech, Inc. 

Baby’s sells strollers, baby and maternity clothes and other items online and at shops in Little Falls and St. Cloud. 

In 2023 the U.S. Small Business Administration 

 Baby’s Minnesota’s woman-owned small business of the year, but the Minnesota U.S. Attorney’s office took a dimmer view. 

Prosecutors say the business “incurred significant losses” after Starin submitted fraudulent claims to the TRICARE military health system for medical equipment that was not eligible for reimbursement. A TRICARE contractor flagged the claims and required auditing prior to payment. 

“This review resulted in the denial of some of Starin’s fraudulent reimbursement claims,” Assistant U.S. Attorney Daniel Bobier wrote in a court filing. 

Starin was not charged in connection with the TRICARE claims. To offset the losses, Starin created a company called Sunshine Medical, which had no business operations or revenue. 

Starin told the lenders that she needed to borrow money to purchase products from Sunshine, and provided “at least 20 invoices” to support her phony claim. 

According to charging documents, Starin obtained $1.1 million from Liquid Capital and another $8 million from Slope Tech. 

Starin, 40, appeared in a St. Paul federal courtroom on Thursday, where she pleaded guilty to one count of wire fraud. Her agreement with prosecutors calls for a prison sentence of between 41 and 51 months, but the final decision is up to a judge. 

Starin remains free ahead of sentencing. 

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Fraud in Minnesota

Matt Sepic

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The U.S. Small Business Administration named Baby’s On Broadway Minnesota’s woman-owned small business of 2023 but the U.S. Attorney’s Office says she used a phony supplier and fake invoices to secure $9 million in financing from two lenders.

Little Falls baby shop owner faces prison after admitting loan fraud scheme

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