DENVER-
A grand jury has joined the investigation into two people accused of bilking the state of up to $10 million in bogus refunds and other payments.
Charges have already been filed against state tax supervisor Michelle Cawthra and entertainment promoter Hysear Don Randell, but prosecutors revealed Wednesday they asked a grand jury to look into the case after the arrests three weeks ago.
Cawthra is accused of funneling fraudulent refunds and transfers into accounts controlled by Randell. She has been placed on leave by the state Revenue Department.
Denver Chief Deputy District Attorney Joe Morales said prosecutors want to make sure they get the facts right in the complex case.
He wouldn’t discuss details of the grand jury investigation but said it gives prosecutors wide authority to subpoena evidence, including bank records, and compel testimony.
“The amount of money lost to Colorado can keep going up,” Morales said. He said investigators need to track down and seize the funds the pair is accused of stealing.
Morales would not say how much money has been located.
If the grand jury issues an indictment, prosecutors would pursue those charges instead of the first set they filed.
Former Denver district attorney Norm Early said Colorado prosecutors don’t have subpoena power, and the only way they can compel people to turn over evidence is through a grand jury.
He said grand juries usually review a case before arrests are made, but the timing in this case may simply mean that prosecutors want to gather more evidence.
“The more complicated the case, the greater the likelihood that you may need the subpoena power of the grand jury,” Early said.
Cawthra’s mother, Sheri Kite, said she testified before the panel but couldn’t discuss the case because of grand jury secrecy rules. She was one of eight Cawthra relatives who came to court Wednesday for a short appearance by Cawthra and Randell.
“I have a great deal of love for her. That’s why I’m here,” Kite said.
Cawthra, 30, faces charges including violating the organized crime act, computer crime, theft, forgery, embezzlement and conspiracy.
Randell, 40, faces charges including violating the organized crime act, conspiracy to commit computer crime, theft, conspiracy to commit theft, forgery and conspiracy to embezzle public property.
According to court documents, he is believed to be the founder of Tru Dat Entertainment, which promotes movies, music and sports.
Arrest affidavits have given varying descriptions of Cawthra and Randell’s relationship. One described Randell as Cawthra’s boyfriend while another said Cawthra worked for Randell.
Cawthra and Randell, both being held on $10 million, were seated apart from one another in the jury box and didn’t appear to look at each other after entering the courtroom. Their preliminary hearing was postponed until July 27 to give defense lawyers more time to review evidence.
An attorney for the Public Employees Retirement Association, the state’s largest public pension system, asked Denver County Judge Aleene Ortiz-White to bar the use of some PERA records in the case. Ortiz-White said defense lawyers and prosecutors could see them if she decided they were relevant but said they would not be made public.
PERA lawyer Gregory Smith said the records dealt with finances. He said Cawthra is a PERA member but declined to say whether the documents were related to her account.
State employees contribute to pension and 401(k) accounts through their paychecks, but they aren’t allowed to contribute extra money from another source, PERA spokeswoman Madalyn Knudsen said.
