Securities-fraud investigations up in Colorado
DENVER, Colorado ” Colorado’s securities commissioner is reporting an increase in securities-fraud investigations in the tough economy.
Colorado Securities Commissioner Fred Joseph estimated his office, which usually has about 200 active cases, has seen a 10 percent to 15 percent increase in open investigations over last year.
The cases are concentrated in oil and gas ” which took off during the first half of 2008 as fuel prices surged ” real estate and investing, Joseph said. The latter includes several alleged Ponzi schemes, Joseph said.
A spokesman for the U.S. attorney in Denver said the office also is seeing an increase in financial-related investigations.
Fraudulent schemes can become popular in good times, then falter as the economy tumbles and operators struggle to pay investors who demand their money back, experts say.
“(Investors) are looking for new places to put their money. What they’ve done in the past isn’t working anymore, and unscrupulous people are taking advantage of that,” Joseph said.
Authorities wouldn’t discuss cases that remain under investigation and haven’t had any charges filed, but several people accused of Ponzi schemes in recent months have been penalized.
Most recently, a Denver judge on Friday sentenced real estate promoter Frederic “Rick” Dryer to 132 years in prison and ordered him to pay $3.43 million in restitution. He was convicted last year on charges stemming from a $34 million Ponzi scheme that duped 1,250 investors.
Outcomes in other cases are pending. Ron and Karol Tutton of Lone Tree said they lost $400,000 when their neighbor William L. Walters left town in August 2006 without repaying money investors had given Walters to invest in his day-trading business.
The U.S. Securities and Exchange Commission sued Walters last week. Regulators alleged his day-trading business was a Ponzi scheme that netted $5.4 million from more than 80 investors in Colorado and other states who were promised 20 percent to 40 percent annual returns. Colorado also indicted Walters in 2007 on 16 counts of fraud and theft, alleging he used investor funds for personal expenses and to pay other investors.
Officials in Argentina recently arrested Walters but released him on bail pending extradition proceedings. Walters does not have an attorney representing him in either case, and he could not be reached for comment.