Le­gal trou­bles hin­der group

Failed projects plague fi­nance team in state

The Denver Post - - BUSINESS - By Christo­pher N. Osher

Mem­bers of a team that sought to raise $50 mil­lion from in­vestors to fi­nance the mar­i­juana in­dus­try in Colorado and other states racked up more than $4 mil­lion in court judg­ments and set­tle­ments for their ties to a trou­bled Cal­i­for­nia con­struc­tion firm.

The Colorado High Yield Fund, based in Long­mont, ad­ver­tised it­self on its web­site as “a cap­i­tal fund that in­vests in fi­nanc­ing in­stru­ments with fi­nan­cial en­ti­ties in the med­i­cal and recre­ational mar­i­juana in­dus­try as well as the re­lated in­dus­trial hemp com­mod­ity mar­ket.”

The web­site stated the fund would “seek to ac­crue and pay­out no less than a net 15 per­cent div­i­dend” to in­vestors, and it made no men­tion of le­gal is­sues fac­ing team mem­bers of the fund. The site was de­ac­ti­vated re­cently af­ter in­quiries by The Den­ver Post.

Tab Turner, an Arkansas lawyer iden­ti­fied on the fund’s web­site as a prin­ci­pal, is in de­fault on a $690,000 set­tle­ment agree­ment af­ter he was sued for failed con­struc­tion projects in Cal­i­for­nia and Ari­zona. Larry Kim­ball, iden­ti­fied as the fund man­ager, has an un­paid judg­ment of $2.3 mil­lion from a suit al­leg­ing bid­ding fraud and breach of con­tract, and an un­paid judg­ment of nearly $1 mil­lion for an ac­tion by fed­eral pros­e­cu­tors claim­ing un­paid pay­roll taxes.

Thomas Alan Boyd, con­victed in 2007 of a con­spir­acy, fraud and false re­port­ing in the $200 mil­lion fail­ure of Best­bank of Boul­der, is act­ing as an ad­viser to the team, he said in an in­ter­view. Some of the team mem­bers are em­bark­ing on plans to build a hous­ing devel­op­ment in Long­mont.

Turner, who suc­cess­fully sued the Ford Mo­tor Co. over SUV rollovers, and Boyd said the fund was not ac­tive, and

that they did not be­lieve it had raised any money from in­vestors.

“To my knowl­edge, the Colorado High Yield Fund has never raised money,” Turner said in an email. “It was cre­ated by at­tor­neys in Colorado to po­ten­tially raise money in the fu­ture, but it has never been used to date that I am aware of. It’s pretty much on the shelf pend­ing more devel­op­ment.”

In pro­mo­tional ma­te­rial of­fered to in­vestors on its web­site, the fund ad­ver­tised that it had pro­duced $10 mil­lion in rev­enue af­ter its found­ing in Fe­bru­ary 2016. The min­i­mum in­vest­ment the fund will ac­cept is $100,000, ac­cord­ing to the web­site.

An­other fund prin­ci­pal listed is Chris Boyd, son of Thomas Alan Boyd. Chris Boyd did not re­turn tele­phone mes­sages seek­ing com­ment.

There is no regis­tra­tion of the fund at the fed­eral Se­cu­ri­ties and Ex­change Com­mis­sion or the Colorado Di­vi­sion of Se­cu­ri­ties. Nei­ther of the two agen­cies would con­firm or deny whether the fund is be­ing in­ves­ti­gated, cit­ing pri­vacy pro­vi­sions.

An of­fer­ing for prospec­tive in­vestors in the fund was con­ducted by Amer­i­can In­vest­ments, a firm whose ex­ec­u­tive lead­er­ship team in­cludes Turner, Kim­ball and Dar­ren Mann, ac­cord­ing to the fund’s web­site.

Turner, Kim­ball and Mann were sued in con­nec­tion with their as­so­ci­a­tion with West Amer­ica Corp., a San Diego-based con­trac­tor. One law­suit al­leged that Mann, who was di­rec­tor of West Amer­ica, and Kim­ball, who was CEO, en­gaged in a “know­ing, in­ten­tional fraud” re­lated to their breached con­tract to build a $21 mil­lion apart­ment com­plex in a San Diego sub­urb. The law­suit al­leged that Kim­ball and Mann, through West Amer­ica, had acted with “mal­ice and op­pres­sion.” A judge or­dered them to pay $2.3 mil­lion.

That 2016 law­suit al­leged that West Amer­ica, through Kim­ball and Mann, billed the owner of the apart­ment com­plex for in­flated bids from sub­con­trac­tors. The law­suit, filed by the com­plex owner, said Mann and Kim­ball pock­eted money that was sup­posed to go to sub­con­trac­tors and also en­gaged in fraud by en­ter­ing into “se­cret side agree­ments” with sub­con­trac­tors to “ar­ti­fi­cially in­flate their bids” for “il­licit prof­its.”

A law­suit filed in U.S. District Court in Cal­i­for­nia in 2015 al­leged that West Amer­ica did not de­liver on $9.2 mil­lion in con­struc­tion projects at an In­dian reser­va­tion near Phoenix, a sub­si­dized hous­ing project in Mari­copa, Ariz., and in San Diego. A firm that is­sued per­for­mance bonds guar­an­tee­ing the con­struc­tion sued for de­fault. Turner and Mann signed a set­tle­ment agree­ing to pay $690,000 but have paid just $45,000 and are in de­fault, ac­cord­ing to court records. Turner said he was sued be­cause he had guar­an­teed the bonds as an in­vestor in West Amer­ica.

Mann and Kim­ball have been sued by fed­eral pros­e­cu­tors seek­ing to re­coup un­paid pay­roll taxes for West Amer­ica em­ploy­ees. A fed­eral judge last year or­dered Kim­ball to pay $937,000 and Mann to pay $1.45 mil­lion owed to the In­ter­nal Rev­enue Ser­vice. Court doc­u­ments filed in that lit­i­ga­tion al­lege Mann ran West Amer­ica but an­other in­di­vid­ual acted as a front be­cause Mann had past le­gal is­sues that made him un­able to ob­tain a con­trac­tor’s li­cense.

Mann and Kim­ball did not re­turn tele­phone mes­sages or emails seek­ing com­ment. In an email, Turner con­firmed that West Amer­ica had gone bust. The firm strug­gled be­cause of two prin­ci­pals ex­it­ing, “leav­ing Mr. Mann alone with in­suf­fi­cient cap­i­tal and re­sources to sur­vive and mounds of obli­ga­tions and debt,” Turner said.

Turner and some of his friends have started a new ven­ture, Mid­ian Homes, in north­ern Colorado, he said. Mid­ian has bought nearly 50 lots for con­struc­tion of homes in Wind­sor. Mann is the con­trac­tor build­ing those homes, Turner said. Kim­ball has ad­ver­tised on the in­ter­net that he also is a prin­ci­pal of Mid­ian.

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