A Denver jury convicted two Florida businessmen Monday of 63 counts of fraud, conspiracy and false bank reporting for pocketing $11.4 million each from a credit-card scheme they ran for the failed BestBank of Boulder.
Douglas Baetz and Glenn Gallant sat motionless in U.S. District Court as Judge Richard Matsch read guilty verdicts for all but three of 66 criminal counts.
They face a minimum sentence of 10 years in prison and a maximum of life behind bars, prosecutors said. Matsch hasn’t set the sentencing date yet. Attorneys for Baetz and Gallant offered no comment Monday.
Baetz’s and Gallant’s company, Century Financial Services Inc. of Oakland Park, Fla., contracted with BestBank in the mid-1990s to market Visa credit cards issued by the bank, in combination with memberships in a travel club.
Century marketed the $543 package deal to “sub- prime” consumers – those with bad credit, low income or both. More than 500,000 people signed up.
The $543 charge was usually placed on the customer’s new Visa account; the card holder was required to pay at least $20 a month on the debt. But the overwhelming majority of card holders never paid, prosecutors said.
Century and BestBank allegedly kept the delinquent accounts current by crediting each with $20 a month, an amount that totaled $49 million over 20 months, prosecutors said.
The companies then attempted to sell the credit-card portfolio, misrepresenting its true value. Meanwhile, prosecutors said, Baetz, Gallant and BestBank’s executives took millions of dollars from the bank’s accounts.
Regulators declared BestBank insolvent in July 1998 and closed the bank, even as Colorado’s economy was booming. It was the first bank default in the state in five years, and one of the largest in the U.S. for a decade.
It lost more than $200 million, much of which was picked up by the Federal Deposit Insurance Corp. Large depositors lost $27 million.
Former BestBank officials Edward P. Mattar III, Thom as Alan Boyd and Jack O. Grace Jr., also facing fraud charges, will be tried separately in federal court in Denver. Trial dates haven’t yet been set.
Baetz and Gallant also own SeaEscape, which runs a casino ship out of Fort Lauderdale.
Their trial lasted nearly four weeks, most of it taken up by accountants, regulators and others testifying for the prosecution. The defense put up just two witnesses and did not call the defendants to the stand. The jury took about two working days to deliver a verdict against the men.
Jurors said Monday that, though complex, the case delivered by Assistant U.S. Attorneys John Haried and Michael Carey left no doubt about the defendants’ guilt.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
