A Denver District Court jury convicted Brian Wellens of Colorado Springs on 13 of 20 counts of securities fraud and racketeering Monday for using $8.5 million raised from 19 investors for his personal expenses and other unrelated businesses.
Wellens, 43, was acquitted on seven counts on securities fraud and conspiracy to commit securities fraud.
He was indicted last year by a Denver Grand Jury in connection with vacation home investments he promoted from 2006 to 2011 through his Colorado Springs-based company, Continental Resort Homes. The indictment charged that instead of buying vacation homes for the company, he used the $8.5 million to pay investors in other ventures he controlled; make mortgage payments on his Broadmoor area home and two other homes in California and Arizona; make payments on his personal vehicle; make credit card payments for his expenses; and financially support unrelated companies he owned.
He also was charged with overstating the assets, debts, capital contributions and number of investors in Continental Resort Homes; understating the company's debts on its balance sheet; and lying to investors about the company owning two properties.
The Denver District Attorney's Office issued a statement Monday that said the charges resulted from a joint investigation with the Colorado Division of Securities.
William Leone, a Denver attorney representing Wellens, said he was "disappointed by the verdict" following the two-week trial, but added that Wellens has not decided whether to appeal the convictions.
Randy Kilgore, one of the victims in the case from Colorado Springs, said: "Justice has been served. It has been a long, tedious process, but it is nice to see that the judicial system still works."
Douglas Schultz, a victim from Westcliffe, said he was "glad justice has taken place."
"The hearing proved that Brian Wellens is one of the most dangerous con artists I have even met, and I have been in the securities fraud investigation business for 25 years," Schultz said. "Coloradoans will be protected only if Brian Wellens is behind bars for decades."
Wellens sought $350,000 to $425,000 from up to 100 investors as an initial entry fee that would be pooled, with 70 percent of the $39 million he hoped to raise to be used to buy vacation homes in Colorado and around the world, according to the indictment. The investment scheme required members to pay an annual fee starting at $30,000 to use the homes, but also allowed them to profit if the properties were sold, the indictment said.
Most of the investors were from the Colorado Springs and Denver areas; the others came from California, Nevada, Texas and Washington.
Wellens filed a Chapter 7 bankruptcy in 2011, listing $36.4 million in debts owed to 76 creditors and $2.08 million in assets.
Four investment groups sued Wellens last year in bankruptcy court, asking Judge A. Bruce Campbell to declare more than $5 million in debts and judgments he owed to them not eligible to be wiped out in his bankruptcy. The bankruptcy and lawsuits from the investment groups are still pending.
The trustee in Wellens' bankruptcy also filed a series of lawsuits last month in bankruptcy court to recover title to a Santa Barbara, Calif., home and two Mercedes-Benz cars that he sold for at least $68,000 less than they were worth at the time. Those suits also are pending.
Wellens is scheduled to be sentenced by Denver District Court Judge Brian Whitney on Jan. 9. He faces up to 24 years in prison on the racketeering charge and up to eight years each on the 12 securities fraud charges.