A Boulder firm that has gone out of business is being investigated for allegedly defrauding Boulder-area businessmen out of hundreds of thousands of dollars, authorities said Monday.
The firm was identified as National 1031 Exchange, 1420 28th St.
According to investigators, the firm and its owner, Debra S. Edwards, provided services to business owners who sold commercial real estate and wished to have the profits from the sale held, tax-free, until they located new property to purchase.
Under the company’s contract, Edwards was supposed to return the money when a new property was located, minus a small handling fee, said Sarah Huntley, Boulder Police Department spokeswoman.
Huntley said the arrangement has received approval from the U.S. Internal Revenue Service.
Edwards said Monday that nothing illegal has happened and that all her clients will be reimbursed by her insurance company.
“Everything is going to be covered,” said Edwards. “Everyone is covered; everyone is fully insured.”
She said she has three or four clients remaining.
Edwards did say that National 1031 Exchange is going out of business because of economic conditions.
“We have suffered business losses,” she said. “The economy is just too horrible to continue. We are not continuing.”
The National 1031 Exchange website states: “Thank you for your interest in National 1031 Exchange but we are no longer accepting new clients.”
Huntley said police began the investigation late last month after one of Edwards’ clients said he had given National 1031 Exchange more than $1.2 million to hold for him while he searched for a new property.
When he found the new property, he claimed that National 1031 Exchange wired him some money but failed to return more than $400,000.
After wrangling with Edwards, Huntley said the businessman was told he’d have to file a demand letter with the company’s insurance provider to collect the rest of the money.
On Friday, a second complaint was filed against National 1031 Exchange.
Huntley said that investigators have learned National 1031 Exchange is no longer in business and suspect there may be other victims, including some who believe their money is still being held in trust with the company.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com
How to help
Individuals with information about National 1031 Exchange may phone Detective Traci Cravitz at 303-441-3330.
