A Fort Collins man who solicited $11 million in investments from approximately 300 Coloradans during a four-year period has been accused of swindling 41 people out of more than $2.3 million.
The state grand jury accused Gene Robert Little, 62, of operating a Ponzi scheme in which he paid early investors in his company — Managed Cash Flow — with money he allegedly swindled from later investors in the company.
The grand jury indicted Little of 42 counts of securities fraud and one count of theft.
According to the indictment, Little formed Managed Cash Flow in May 2002 and solicited more than $11 million from investors from 2002 to 2006, promising them returns of 15 to 20 percent.
Investors would accrue interest on a monthly basis and had the option to let it compound or receive monthly interest checks.
The grand jury said that the investors were told that their money was being placed in “factoring” accounts that were being purchased by Nationwide Cash Flow Specialists.
Little claimed that Nationwide paid Managed Cash Flow a 20 percent annual return. He said 15 percent of that would go to the investors and the remaining 5 percent would be kept by Little.
Investigators claimed that in July 2005, Little stopped forwarding investor funds to Nationwide but continued to solicit and accept new investor funds.
From August 2005 through April 2006, Little received more than $2.3 million in investments from 41 Colorado investors, the indictment said. He used all but $8,631 of that money to pay the promised 15 percent to the investors who had put money into the company prior to August 2005.
The 41 investors never regained their principal investments, totaling more than $2.3 million, said Colorado Attorney General John Suthers and Colorado Securities Commissioner Fred Joseph.
“I strongly encourage consumers to question a high rate of return promised for their investment dollars,” Joseph said Wednesday. “By contacting our office, investors may save themselves a lot of misery, but more importantly hard-earned money.”
If convicted on all counts, Little would face a minimum sentence of 172 years and millions in fines and restitution, the attorney general’s office said. Little is currently free on a $50,000 bond.
Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s.
Ponzi told investors he could provide a 40 percent return in just 90 days compared with 5 percent for bank savings accounts. A few early investors were paid off to make the scheme look legitimate, but they were paid with money from new investors.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com
