Missing Breckenridge lawyer Royal “Scoop” Daniel III has been in serious debt for years and may have been planning an international escape for at least the past year, according to an arrest warrant affidavit released today.
Breckenridge police have been unable to locate Daniel’s passport since he mysteriously vanished April 27.
The state Attorney Regulation Counsel said it believes Daniel may have withdrawn up to $1 million in clients’ funds before disappearing. Friends say he may have traveled to Brazil.
Investigators contacted the U.S. Passport Agency, which told them Daniel had renewed his passport in 2006 giving the reason for the renewal as “travel in late April, 2007.”
Daniel’s girlfriend, Jennifer Rathbun, told investigators that Daniel dropped her off at her home at 5:30 a.m. the day he disappeared and gave her a key to his house. She said that was strange because he never locked his house. She also said he gave her his jogging suit and Sorel boots, saying he wouldn’t need them for awhile.
The night before he disappeared, Daniel took Rathbun to a fundraiser, where he bought several items. The next morning, after dropping off Rathbun, he telephoned the woman who ran the auction and gave her a Visa credit-card number to pay for the items he bought. The credit card was rejected.
Investigators also have not been able to find Daniel’s laptop computer and one of two motorcycles he owns.
And since Daniel disappeared, seven people have contacted authorities saying that Daniel was holding 1031 escrow money for them. Four of them said he held more than $500,000 of their money.
The arrest affidavit shows that Daniel had been transferring clients’ money without their knowledge among 10 bank accounts he controlled, which is illegal for attorneys.
One client, Eugene Gregory of Franktown, who owned an excavating company in Breckenridge, told investigators Daniel spent $250,000 that he gave him as escrow money for a 1031 real-estate exchange in 2006.
In 1031 exchanges, a real-estate owner may trade one property for another and transfer any tax liability to the second property.
When confronted by Gregory, Daniel said he had used the money to repay other 1031 clients, then admitted he was about $300,000 in debt.
Eventually, Daniel repaid “most” of the $250,000, Gregory said.
In an e-mail to authorities, Gregory wrote: “Scoop admitted a year ago he was in debt and was using one person’s 1031 money to close the last 1031, & that the funds were no longer there.”
Daniel’s legal assistant, Sarah Bailey, told investigators that on the day Daniel vanished, she found her paycheck in an envelope addressed to her on her desk, which was highly unusual because he always handed her her paycheck just minutes before 5 p.m. each payday.
Bailey also told investigators that Daniel moved money into and out of client trust accounts and 1031 escrow accounts, sometimes using the money to pay office operating expenses and personal debts.
She said she once found a letter that Daniel was behind in child support and a 2005 letter of discipline from the Colorado Supreme Court, which oversees licensed lawyers.
The office of Attorney Regulation said discipline letters are not public record and would not confirm or deny the letter to Daniel.
Rathbun, Daniel’s girlfriend, told investigators that Daniel had been in “extreme credit-card debt” and that she had tried to assist him in opening a line of credit at the bank where she worked. Daniel was rejected because of his high debt and current tax liens, she said.
According to the affidavit, Daniel tried to borrow money in 2000. On his loan application, he wrote that he had been representing Trans-Brazil Airlines, which had taken a serious downturn in business in 1997, cancelling all international flights except one to Miami.
“As a result, our income from that client, which was about 60 percent of a $250,000 per year practice, dropped to nothing,” he wrote in the application. “This has caused us to retool the practice over the last two years.”
