They spent lavishly, shelling out millions of dollars for the historic Redstone Castle near Aspen, eight NASCAR race cars and other items.
One problem: The money wasn’t theirs to spend.
On Tuesday, a federal jury in Denver convicted the four businessmen on multiple fraud charges in connection with a high-yield investment scam that bilked more than 1,000 investors out of $56 million. Each faces years in prison and thousands of dollars in fines.
“I like that,” victim Dorinda Bellas said when told of the verdict. “They didn’t have any qualms about taking our money, so, hey, payback’s a bitch.”
Bellas, a Golden resident, said she invested $10,000 with the group, who told her they had World War II-era German war bonds that could be worth a fortune.
“Investment schemes, such as the one the defendants were found guilty of operating today, involve empty promises, and no real financial returns,” said a statement from U.S. Attorney Troy Eid, who was at the Denver federal courthouse for the verdict.
Each of the defendants stood stoically while U.S. District Judge Robert Blackburn read their verdicts, reached by a jury of eight women and four men after six days of deliberations. The trial lasted six weeks.
Denver resident Norman Schmidt, who prosecutors say was one of the group’s ringleaders, was found guilty on 37 of 42 charges, which included several counts of conspiracy, mail fraud, wire fraud, securities fraud and money laundering. Schmidt, 71, was accused of withdrawing $1.5 million from investor accounts.
Schmidt’s attorney, Thomas Hammond, said he would reserve comment until after sentencing, scheduled for Aug. 31. When asked whether he would appeal, Hammond said, “Oh, yes.”
Schmidt and his partners attracted investors in the late 1990s by promising them 25 percent to 100 percent returns. Instead of investing the money, they used it on themselves and to make “Ponzi payments” to other investors, the government alleged.
They spent $6.3 million on the 24,000-square-foot Redstone mansion, at least $6.1million on NASCAR race cars, $500,000 on a New York restaurant and $6 million on a Florida company that traded euros.
Downfall began in ’03
The group’s downfall began in Chicago in February 2003 when a man told them he wanted to invest $10 million. The man was an undercover FBI agent, and the meeting was videotaped.
The other defendants:
Lewis, Weed and Smith are scheduled to be sentenced in September.
Maximum penalties
Maximum penalties for the charges are as follows: for conspiracy, five years in prison and a $250,000 fine; for mail fraud and wire fraud, $1 million fine and up to 20 years in prison, depending on when the crime was committed; for securities fraud, five years in prison and a $10,000 fine; and for money laundering, 20 years in prison and $500,000 fine, or two times the value of the associated property.
Only Schmidt was in jail during the trial, and only he will be in jail until sentencing.
The government was able to recover $24 million in assets, including $17 million in cash from numerous bank accounts.
The Redstone Castle was seized in 2003, sold in an auction, and later reopened as a bed and breakfast.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
