It was supposed to be Dacono’s big economic engine, bringing hundreds of new jobs and driving visitors to the small farming town 30 miles north of Denver.
The 100-acre development, announced a decade ago, was slated to be a factory-outlet mall featuring 50 stores, anchored by an Oshman’s sporting-goods store.
Instead, the development became fertile ground for fraud, leading to scams that bilked millions from hundreds of investors, regulators allege.
This week, the U.S. Securities and Exchange Commission charged two California businessmen with swindling at least $7.5 million from 126 investors from 1999 to 2002 in an investment scheme involving the mall project.
The Dacono factory-outlet mall was never built, and the land went into foreclosure in 2001, according to a lawsuit filed by the SEC on Monday in a California court. Many of the victims were elderly and were solicited through Jehovah’s Witnesses congregations.
The SEC wouldn’t disclose how many of the victims, if any, resided in Colorado.
In the suit, the SEC alleges that Ronald J. Nadel and Joseph M. Malone, through their company Renaissance Asset Fund, raised more than $16 million from at least 190 investors nationwide for four projects that did not exist or were unsuccessful. The other projects included a general investment fund, an international currency exchange and a Swiss bank.
The commission’s Denver office spearheaded the investigation because of the Dacono scam, said SEC assistant regional director Laura Metcalfe.
Nadel and Malone operated a Ponzi scheme from March 1999 to April 2004 in which they used funds from later investors to pay earlier investors, regulators allege. They also used the funds to pay for lavish personal expenses. They lured investors by promising a 17 percent to 25 percent return on investment.
“The majority of investors in Renaissance never received the promised interest or return of their principal,” the suit states. “The promised returns offered investors were fraudulent.”
Nadel diverted at least $2.3 million to himself and paid Malone at least $230,000, the suit alleges.
Nadel, based in San Clemente, Calif., and Malone, based in Newport Coast, Calif., could not be reached for comment Tuesday.
The SEC also said this week it has settled with a third businessman, Kenneth E. Baum, based in Hemet, Calif. He allegedly sold Renaissance investments to senior citizens. The settlement ordered Baum to stop selling those investments.
The parcel sits on the northeast corner of Interstate 25 and the Weld County Road 8 interchange. Compass Bank foreclosed on the property in 2001, and it is now owned by RanchView LLC, said Dacono City Manager Karen Cumbo.
The SEC’s Metcalfe said Tuesday that the Dacono scam involves the same property and mall proposal connected to a separate investment scam that occurred from 1995 to 1999.
In 2001, four Arizona businessmen, including initial land developer Wendell “Ted” Decker, agreed to pay about $15 million to settle civil charges with Arizona state regulators that they defrauded at least 110 investors in the outlet mall of more than $5 million.
Those charges, and the individuals involved, are separate from the SEC case, said Metcalfe.
Staff writer Andy Vuong can be reached at 303-820-1209 or avuong@denverpost.com.
