Oh how I love SEC filings...they reveal the juiciest bits of information—almost like the inside of a pomegranate.
Your girl Miss Fortune has just been reading the sordid tale of one Richard Dalton, who is currently serving 10 years in federal stir for running a $17 million dollar Ponzi scheme out of his Golden, Colorado home.
Richard Dalton was sentenced last June in U.S. District Court in Kansas City to 10
years in federal prison for his role in engineering a Ponzi scheme so
elaborate that investors remained duped long after their money had
Dalton pleaded guilty to a single charge of money laundering.
His wife, Marie
Dalton, was sentenced to five years in federal prison for her guilty
plea to a charge of conspiracy to commit mail fraud.
According to SEC filings, the Dalton gang
ran a scheme through their company, Universal Consulting Resources, that
forestalled investor anxiety and worry with tall tales that seemed
pulled from a spy novel: a foreign double-cross involving fake diamonds;
offshore bank accounts tied up in government investigations; even a
middle-of-the-night airplane rendezvous moving gemstones out of Africa
that ended up with engine trouble in Amsterdam.
All were reasons
the Daltons gave investors for why they weren't seeing any of their
money — and they believed them, federal prosecutors said.
bilked more than 100 investors in 13 states and five countries with
promises of annual returns that ranged from 48 percent to 120 percent,
paying some investors off with the funds from others.
cases, the Daltons used investor money for their own gain, including a house in Golden that was ordered sold.
Just days after the
SEC's Denver office filed a lawsuit against Richard Dalton in November
2010 — and a separate case against his mentor, Larry Michael Parrish —
the Daltons hopped a plane to South Africa and stayed away from
authorities for nearly a year.
South African authorities finally caught up with the Daltons in late 2011, and they were arrested trying to enter the U.S. in Atlanta.
But what about that house, Miss Fortune? And what does this story have to do with our favorite sports bar-owning Battle Creek chiropractor?
One of Dalton's investors was Robert Buckhannon's Arcanum Equity Fund, which listed a $2 million "Joint Venture Agreement: Diamonds-Dick Dalton" in its bankruptcy filing under "personal property". (Personally, I would have listed it under "burst soap bubble".)
Buckhannon's funds offered some twists on the usual flim flam, according to the SEC’s original complaint. Rather than selling limited partnership interest, Arcanum sold notes to investors who were assured their capital would go to A-rated fixed income investments.
Aside from diverting investor cash to other businesses, the SEC alleged that the fund managers paid themselves fat salaries based on inflated asset valuations, used fake account statements to conceal losses from investors, and ultimately drove the funds into bankruptcy.
"Arcanus" is a Latin word used to describe things that are secret or hidden, as in “the ultimate fate of investors’ cash is a big, fat mystery.”
But what's not a mystery is Arcanum's role in Dalton's acquisition of that Golden home.
SEC records show that in June 2008, Dalton's firm, Universal Consulting Resources (UCR), entered into a lease/purchase agreement for a residence located at 927 Cole Street in Golden, Colorado, and paid approximately $4000 per month in rent.
In June 2009, the lease/purchase agreement was modified to allow Marie Dalton to purchase the Cole Street Property for $936,000 and the transaction was accomplished by making a cash payment of $936,000.
Marie Dalton purchased the Cole Street Property with funds provided by Dalton. Bank records show that UCR transferred over $1.2 million in investors’ funds to Arcanum Equity Fund, one of Buckhannon's two hedge funds (the other being the Vestium Equity Fund) and that Arcanum Commodities Group Inc. later transferred $910,356.44 to Guardian Title Agency, LLC for the purchase of the Cole Street Property...from a bank account in Liechtenstein.
Liechtenstein? What, the country that has a reputation as a place whose custom of bank secrecy makes it
attractive for hiding money of illegal origin, or for hiding legitimate
income from the tax office?
Yes, that Liechtenstein!
And the nearly $300,000 difference?
Wonder if that was the tip?