January 9, 2014 Updated: January 10, 2014 at 3:08 am
A Denver District Court Judge sentenced a Colorado Springs business ownerThursday to 16 years in prison for using $8.5 million in investor money for his personal expenses and for other unrelated businesses.
Brian Wellens, 43, was convicted in November by a Denver jury on one count of racketeering and 12 counts of securities fraud in connection with vacation home investments he promoted from 2006 to 2011 through his Colorado Springs-based company, Continental Resort Homes.
He was sentenced to 12 yearson the racketeering count and four years for the securities fraud counts, which would be served back-to-back. He also received five years of parole on the racketeering conviction.
Joe Morales, chief deputy district attorney in Denver, said the sentence was "completely appropriate given the facts and that probation (sought by Wellens) was not appropriate, given the number of victims, the amount of money involved and the lack of disclosure by the defendant from the very beginning."
The sentence comes as Wellens faces another charge in Washoe County, Nev., tied to one of the victims in the Denver case. He faces one to 20 years in prison on a "misrepresentation in the sale of securities" charge - a sentence that would be doubled if he is convicted, because the victim is a senior citizen, said Mike Bolenbaker, a deputy district attorney in Washoe County. It is not clear when Wellens will face those charges, since he was immediately taken into custody by Denver County Sheriff deputies after he was sentenced.
A Denver grand jury indicted Wellens in 2012 on 20 counts. One count, conspiracy to commit securities fraud, was dismissed by Judge Brian Whitney. Jurors acquitted Wellens on six others.
The indictment charged that instead of buying vacation homes for the company, Wellens used $8.5 million from 19 investors to pay investors in other ventures he controlled. He was also accused of using the money to make mortgage payments on his Broadmoor area home and two other homes in California and Arizona; make payments on his personal vehicle and credit cards; 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.
Wellens sought $350,000 to $425,000 from up to 100 investors each, 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 homes 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.
Douglas Schultz, a victim from Westcliffe, said the sentence was the minimum he expected. "He deserved a lot more for the tens of millions of dollars he stole and the 50 plus people he injured," Schultz said.
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 them ineligible to be wiped out in his bankruptcy. The bankruptcy and lawsuits from the investment groups are pending.
The trustee in the bankruptcy also filed a series of lawsuits last year to recover title to a Santa Barbara, Calif., home and two Mercedes-Benz cars that Wellens sold for at least $68,000 less than they were worth at the time. Those suits also are pending.
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