Lutsen owner asks judge to dismiss arson, insurance fraud charges

Tom Olsen, Duluth News Tribune, Minn.Duluth News-Tribune

Jun. 16—GRAND MARAIS — The owner of Lutsen Resort will seek the dismissal of arson and insurance fraud charges in the February 2024 fire that destroyed the historic North Shore lodge.

Prosecutors, meanwhile, say they will pursue an above-guideline sentence if Bryce James Campbell is found guilty of

allegations that he burned down the iconic property in an attempt to collect insurance money.

Campbell, 41, appeared at a virtual hearing in State District Court on Monday for the first time in three months as attorneys have been sifting through extensive evidence in the high-profile investigation.

Defense attorney Eric Newmark filed a one-page motion last week formally asking the court to dismiss all four counts in the criminal complaint for lack of probable cause.

It is anticipated that attorneys will submit written briefs on the issue and a judge will be asked to review a considerable amount of police reports and other investigative materials detailing the investigation.

But first, Judge Michelle Anderson must determine whether those same materials will become immediately available to the public, or if certain documents should be kept confidential.

Assistant Minnesota Attorney General Dan Vlieger asked the court to seal all forthcoming submissions related to the probable cause challenge.

Vlieger said the materials will likely include police reports, interview recordings and transcripts, financial records, fire and investigative reports, insurance investigation reports, forensic testing results, surveillance video and certified court documents.

That information is generally inaccessible to the public during an active investigation under the Minnesota Government Data Practices Act, the prosecutor noted, and it is a major case with extensive media coverage.

"Allowing access ... will further jeopardize a fair trial for both parties," Vlieger said, "and presents a substantial likelihood of interfering with the fair and impartial administration of justice in not only the criminal matter, but also the numerous civil suits currently pending."

Newmark said he found the request a "bit unusual" given that the Minnesota Bureau of Criminal Apprehension, State Fire Marshal and Cook County Attorney Jeanne Peterson participated in a news conference to "put out their side of the case" when Campbell was arrested and charged in December.

"They seem to be admitting that there was prejudice that resulted from the pretrial publicity in this case, which mostly was because of the state's efforts to put information in public," Newmark said. "And now they're asking to essentially not put information to the public."

Vlieger responded that the news event was limited to already public information contained in the criminal complaint. He said the investigative reports will include confidential information, and a public release would also effectively allow civil attorneys to "do an end-around" the data law.

Judge Anderson said she would not impose a blanket order sealing the documents, noting the information is presumptively public under court rules and questioning whether the public and media had an opportunity to weigh in on Vlieger's request.

Anderson ordered the attorneys to work together over the next several weeks on redacting information that should be kept confidential, such as addresses and bank accounts. She directed the parties to identify any issues still in dispute before a July 17 hearing.

Campbell, who is charged with three counts of first-degree arson and one count of insurance fraud,

remains on supervised release after posting a $100,000 bond.

If the judge finds probable cause for the case to proceed, Newmark said he anticipates filing a motion to move the trial out of Cook County, a community of just 5,600, where it could prove difficult to seat an impartial jury.

Anderson is chambered in Virginia; she was assigned to the case after Campbell exercised his right to remove Judge Steve Hanke, the lone jurist on the North Shore. Most of the attorneys working on the case are based in the Twin Cities.

If Campbell is ultimately convicted, prosecutors may seek to prove an aggravating factor that would allow the court to depart from state sentencing guidelines and impose up to the statutory maximum of 20 years on each count.

Vlieger said Campbell's alleged acts were a "major economic offense" because the actual monetary loss is substantially greater than the minimums specified in state law and Campbell used his position to facilitate the offense.

"Here, the allegations of (Campbell's) insurance policy claim exceeds $15,000,000, which is more than 425 times the statutory amount" for insurance fraud, Vlieger wrote in a notice, adding that the "total destruction" made it difficult for vendors to collect debts from the businessman.

"Defendant could not have carried out the arson and insurance fraud but for his position as the owner of Lutsen to fill out the insurance paperwork and sneak into the building undetected to commit the offense."

Campbell, who

bought the property in 2018,

had undertaken extensive renovations, including an overhaul of the restaurant and plans to open guest rooms on the long-shuttered third floor of the 1952 building.

But his business entities were reportedly in serious financial trouble, owing more than $14 million in past-due and near-due debts at the time of the fire, and holding just $34,000 in their collective bank accounts. A bank had issued a default letter on one of his mortgages just two weeks before the blaze.

A criminal complaint alleges that Campbell seemingly joked about burning it down in the days before the fire. Authorities also say that he lied about his whereabouts that night, with evidence eventually showing he was inside the lodge less than an hour before smoke was first seen, and that a possible accelerant was found in a basement boiler room.

Campbell has repeatedly denied any involvement in the fire. In January, he

sued his insurer for denying his $16.5 million claim

— a case that remains suspended pending the outcome of the criminal prosecution.

Campbell has faced a number of other lawsuits from contractors, employees and cabin owners seeking unpaid debts, and in July 2024, he

lost control of a Two Harbors resort, Superior Shores, after defaulting on payments.

The

future of the Lutsen property remains tied up

between mortgage holders, unpaid contractors and Campbell's insurer. A case seeking to force an auction of the property also remains on hold, with the Minnesota Court of Appeals last month denying an architectural firm's request to order a trial date amid the criminal proceedings.

More recently, Campbell has been sued by a group of condominium owners at Superior Shores. They allege he "co-mingled" funds between his two resorts, using their money to pay unrelated expenses and then wrongfully diverting nearly $100,000 to pay an overdue water bill.

The civil complaint accuses him of theft, conversion, breach of fiduciary duty and unjust enrichment. Campbell has filed an answer denying the allegations, asserting that he is not personally liable for any business debts and indicating he will seek to have the case dismissed.