Two men have been indicted by a Boulder grand jury for allegedly conducting more than $18 million in fraudulent securities transactions involving more than 200 investors.
Bela Geczy, 57, of Longmont and Michael Brian Kass, 48, of Boulder were indicted on multiple counts of securities fraud and violation of the Colorado Organized Crime Control Act, the Boulder district attorney said in a news release.
The indictment alleges that Kass and Geczy owned and operated Dharma Investment Group LLC and used the company to “solicit millions of dollars from investors in a fraudulent manner.”
The indictment alleges that the pair ran a Ponzi scheme, paying early- round investors with money obtained from late-round investors.
The two are the latest in a string of alleged Ponzi schemers investigated by state and local authorities in Colorado, including:
• Shawn Merriman of Aurora, who pleaded guilty to fraud in a case accusing him of bilking investors out of $21 million.
• Mark J. Jackson of Englewood, an investment adviser charged with running a $30 million Ponzi scheme.
• Wayde and Donna McKelvy, whose Centennial-based Speed of Wealth allegedly raised $30 million in an investment scam.
• Philip R. Lochmiller of Grand Junction, who is accused of bilking more than 400 investors out of more than $30 million.
The Dharma indictment alleges that the company offered “guarantees” on investments even though the company allegedly had no financial ability to pay the guarantees when the investments failed.
The indictment claims that Kass and Geczy promised annual rates of return of between 20 percent and 500 percent on its investments, even though the investments were high-risk and unpredictable.
A phone number for Kass was disconnected, and a person answering Geczy’s phone said he was away and could not return phone inquiries.
The alleged scam operated between October 2005 and October 2007 and was based out of 737 29th St., Suite 300, in Boulder, where the two maintained their offices, according to the grand jury.
During those two years, the company solicited more than $18 million from about 270 individual investors, according to the indictment.
Some investors made multiple investments or rolled over profits and principal from one investment to another.
The grand jury said most of the investors received partial or no interest payments on their investment and that most of the investors lost a large portion of their original principal.
The investors were solicited for a wide variety of investments, including investments in a local coffee company, offshore and domestic real-estate developments, real-estate investment notes, a “blended pool” of investments and investments in startup companies, according to the grand jury.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com
