Questions are once again nagging the city's U.S. Olympic Committee retention deal now that a grand jury has indicted Ray Marshall and James Brodie of LandCo Equity Partners on 33 felony counts.
The city's USOC partners face not only those but also several civil lawsuits alleging they bilked investors out of money in a complex Ponzi scheme and money-laundering operation, with one plaintiff contending Marshall diverted stolen money to the USOC deal.
Brodie, the LandCo CEO, and Marshall, the board chair, are free on $50,000 bond each, after being accused of theft, securities fraud and racketeering in connection with numerous real estate schemes. Although the indictment doesn't cite the USOC project, finalized a couple weeks ago, a former LandCo insider says Marshall diverted money from other deals to the downtown USOC building.
The criminal charges against the two, and lawsuits on file for months against Brodie, Marshall, LandCo and other entities they control, paint a picture of a racket in which the developers shoveled ill-gotten millions into a meatgrinder called UBS Financial Services — with their UBS broker, Mayor Lionel Rivera, manning the crank to spit out legitimate securities on the other end.
Marshall's high-profile attorney, Pamela Robillard Mackey of Denver — most widely known for having defended basketball star Kobe Bryant against a rape charge in 2003-04 — says Marshall is innocent. It's unclear who's representing Brodie in the criminal case; Timothy Brewer, his lawyer in a related civil action, refused to comment.
El Pomar bailout
The USOC affair began in fall 2007. The city says the USOC chose LandCo, but several people with knowledge of negotiations say privately that Rivera maneuvered the selection. The deal fell apart in late 2008, even as Marshall was being sued by investors in other projects.
Yet the city struck a new deal with LandCo, despite Marshall's suit against the city alleging breach of contract. The deal culminated in October when the city issued $31.5 million in debt, using certificates of participation to buy the upper five floors of LandCo's building at 27 S. Tejon St. LandCo retained the ground and basement levels, leaving the higher floors for the USOC headquarters. The deal also includes $13 million in COPs, or bonds, and El Pomar Foundation money to improve the Olympic Training Center and to spruce up a building west of downtown for USOC's national governing bodies.
But recent revelations have left some local business leaders questioning how a pair of accused criminals — whose operation was so intricate that the grand jury needed six months to untangle it — could land at the center of a plan to retain what is arguably the city's most prestigious employer.
Some also wonder how much Rivera knew, considering he invested money for Marshall for months leading up to the initial USOC talks. It remains unknown how much Rivera made on the investments, but one person close to the lawsuits says it was "in excess of six figures."
The indictment describes the alleged crimes cryptically, and we've seen only the tip of the iceberg, says Lindsay Fischer, an attorney who sued the city in hopes of barring it from issuing the USOC deal's debt without a vote of the people. (The case is on appeal.)
"The mayor's problems aren't over," Fischer says, adding that many people in the community have knowledge of Rivera and Marshall's activities. "Now that the DA has finally indicted these two gentlemen for some pretty serious stuff, maybe these hesitant persons will now think it's safe to talk."
To longtime developer Steve Schuck, the USOC deal never made sense and still doesn't: "My primary question is, why did we do it this way? Why did it get to this point?
"I'm sad for our community," he adds. "We have done better, and we deserve better."
He says the community's leadership should've taken time to vet Marshall.
"Over the years, our community has been blessed with many high-quality developers who have been very generous in support of civic activities," he says, "and many of us are disappointed, and in some cases outraged, by what has happened."
Some answers might come as the criminal case unfolds and during a civil trial set for April in a case brought by a former LandCo investor and employee.
Howard Berlin, a semi-retired public relations expert, invested $1,222,700 in four deals orchestrated by Marshall and his entities from December 2006 to March 2007, according to court documents. In October 2007, Berlin joined LandCo to help raise money from banks and investors and to act as "front man" for publicity surrounding LandCo's USOC proposal.
By early 2008, Marshall was twisting his arm to invest another $1.5 million. Berlin balked, considering what he had observed. He says in an affidavit: "It was my impression that virtually all available funds from loans and investors in LandCo's various projects were being used to pay general LandCo corporate expenses" while Marshall shelved other projects and used the money from them "to pursue the USOC deal for LandCo's benefit."
Berlin quit LandCo in April 2008, and soon learned Marshall sold a project in which Berlin held a 25 percent interest to another LandCo entity in which Berlin held no interest, wiping out Berlin's investment. Berlin sued Marshall, LandCo and four LandCo entities in July 2008, contending Marshall diverted money from investor-funded projects to Marshall's projects and lied about projects' worth.
In one deal, Marshall sold Berlin 25 percent interest in 12 acres for $372,720, while LandCo (or Marshall) had invested only $434,849. Marshall settled for an undisclosed sum but defaulted, Berlin's lawyer Bruce Wright says, so Berlin revived the suit.
Investor Jack Mason sued Marshall and several of his entities, alleging a similar pattern. An independent accountant retained by Marshall's attorney concluded $1.66 million of improper transfers had been made from North County Land LLC, one of Marshall's entities, court documents show. Marshall settled for an undisclosed amount, and again, didn't pay.
"There were two or three settlements, and Marshall broke all of them," Wright says. "[In] the last one, the judge from the bench told Marshall on a Monday if he failed to live up to that settlement he would be in contempt of court by Wednesday."
Most recently, siblings Gary and Kathleen Walters sued Marshall, Brodie, LandCo and two other related entities, charging that Marshall stole their money and used it to pay other investors, including themselves, and to make securities trades with Rivera.
The motive? The lawsuit alleges Marshall used investors' money to prop up a Ponzi scheme; breached his fiduciary duties; and laundered funds through UBS to satisfy "Marshall's rapacious greed."
"Lawsuits, news reports, ethics hearings and a criminal investigation have hobbled Marshall's criminal enterprise," the Walterses' attorney James Helfrich wrote. "But for at least four years, Marshall used a mix of cunning and political influence to cheat individuals and institutions out of millions of dollars. Brodie offered essential support to Marshall's criminal enterprise and profited handsomely from it."
The criminal case lists 15 alleged victims. Whether more indictments will come isn't clear, but District Attorney Dan May says if more evidence arises, the grand jury can reassemble.
Vice Mayor Larry Small seems to want to wash his hands of the whole business. He hasn't even read the indictment, saying, "It doesn't concern me."
Nor is Small interested in further ethical questions, saying the city's Ethics Commission has covered that ground.