Fredric “Rick” Dryer – Ponzi Scheme Fraudster Sentenced to 132 Years in Prison. Ethics and Fraud Prevention Expert Chuck Gallagher Comments

Forty-four felon counts faced Fredric “Rick” Dryer as the judge prounced his sentence.  fredric_dryer_t220

“Thinking about this case last night, I wondered what makes you different than the people who put guns to victims’ heads?”  Judge Mansfield said prior to giving out the sentence. “Are the victims any less hurt?”

That question is being asked alot these days.  “Are victims any less hurt?”  In one sense yes and the other no.  Yes, there was not a physical violation, but the emotional toll that theft creates is significant.  I know.  I unfortunately created that pain in people I victimized many years ago.  And just like Dryer, I faced a judge and was sentenced…to prison.

Today, things are not that different than in 1986 when my crime was committed.  But for a moment let’s look at what Dryer did and why.

Ordered to pay $3.4 million in restitution, Dryer was sentenced to 132 years in state prison.  Now, practically speaking the restitution is moot.  Dryer, with a sentence like that, will more than likely die in prison.  There is little to no chance that any restitution will be made.

According to the Denver Business Journal:

Mile High Capital Group, a real estate investment group,  purported to sell duplex rental units to investors, who could then resell them for a profit. The company also had several sister companies that specialized in tax-deferred real estate transactions and rental property management.

Dryer and his associates promoted Mile High and its offshoots at heavily promoted events at high-end hotels throughout the United States.

But despite generating more than 1,000 contracts and $44 million in sales, the Greenwood Village-based company completed only about 32 duplex rental units, prosecutors said.

The scheme cost some investors their life savings. Investors ranged from blue-collar workers and Chinese immigrants to flight attendants and Harvard-educated attorneys.

While Dryer’s attorney said he will appeal his sentence, Dryer is a convicted felon, who was charged with a bank robbery in 1971 and two other securities fraud cases in the early 1980s, he’s not eligible for probation.  While it is not my intend to be judgemental, as I’ve been in his shoes, it does appear that Dryer didn’t learn from his past choices.

Every choice has a consequence.  As humans we all make choices daily and the choices that we make today will determine our future tomorrow.  Dryer had the opportunity on, what appears to be several occasions, to make better choices.  He elected no to and the price or consequence for his most recent set of choices – life and/or death in prison.  Not what most would call a pretty end.

SO HOW DOES ONE GET SCAMMED BY A PONZI SCHEME?

Reality check is – it is easy.  The fraudster just sucks you into the PIT.  Now for those of you who follow my blog, I have reported on this before in entries related to Bernie Madoff.  But if you have not read those let me help you with understanding the PIT.

The first part of most any financial fraud starts with the PROMISE ( P ).  Fortunately I was not a Dryer investor, but in all cases the PROMISE is a return better than what the average investor could gain if investing in the open market.

Now think of it, if someone told you that he/she could get you a return that practically no one else could get and get that return for you consistently year after year, wouldn’t you be interested?  Sure you would!  So POINT OF ADVICE:  If you wish to avoid being scammed, understand – if it sounds to good to be true – it LIKELY ISN’T TRUE!

The second part of the fraud triangle is the ILLUSION ( I ).  Promoted at high end hotels, investors though that they were investing in real estate ventures that for all practical purposes didn’t exist.  The illusion was created by the marketing and promotion.  For real estate the setting created – the perfect ILLUSION.

This second component of being defrauded is actually the hardest to crack.  Why?  Well, think of it, if you were that good at investing you wouldn’t need someone like Dryer and his team.  That said, a great ILLUSIONIST should be able to fool you.  Dryers clients were fooled and my of them were experienced investors.

That leads to the third and final component of fraud – TRUST ( T ).  In order to effectively pull a fraud off, someone has to trust the fraudster.  Now, having been a fraudster (not something I am proud of), I understand the mentality.  It is much easier to defraud someone who is close to you and trusts you than it is to defraud a stranger.  It isn’t that fraudsters want to hurt those closest to them, rather, it is just easier to convince someone who is close to you to trust you.  Trust here was established by the sheer number of investors.  Once there were contracts, there was the illusion that if one or a hundred made the leap then – “so should I.”

To illustrate this point – TRUST

Among the victims listed in the superseded indictment were Lori Fuller, Dietz’s sister, who invested $680,000 into Mile High and invested in two Mile High duplexes in Milliken, which were never built, according to the indictment.

According to the indictment, Fuller was promised returns of up to 12 percent on her investments. While Fuller received monthly payments for a “period of time,” the indictment states Dryer and Mile High didn’t return her principle.

Again, according to the Denver Business Journal:

While 35 investors are named in the indictment, records relating to Mile High’s Chapter 11 bankruptcy indicate that as many as 1,000 people nationwide could have lost as much as $35 million in the case.

AS A SIDE NOTE:

I have received many calls from investors who have been defrauded in other cases now being investigated or coming to light.  The investigators do not follow every lead and every person who has been defrauded.  They gain enough evidence to win the case.  Beyond that they understand that the likelyhood of loss recovery is slim and their role is to prosecute – not to make victims whole.

QUESTIONS:

  1. If you were defrauded by Dryer and his partners, would you contact me please.  I am writing a book and would like to interview you about how you were scammed.
  2. If you were scammed by Dryer, have you been advised that there is a provision of the Internal Revenue Code – Section 165(c)(2) which might help in your loss recovery?
  3. If you were scammed, would you consider commenting on this blog regarding how you feel about Dryer’s sentence?

AS ALWAYS YOUR COMMENTS ARE WELCOME!

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9 Responses to Fredric “Rick” Dryer – Ponzi Scheme Fraudster Sentenced to 132 Years in Prison. Ethics and Fraud Prevention Expert Chuck Gallagher Comments

  1. Sheila Camba says:

    Hello Mr. Gallagher, I was just informed via email that Rick Dryer was convicted on Friday. I was part of the scam and would like to find out if you knew how we can get restitution? Although the amount my boyfriend and I invested did not amount to what his sister invested, as a blue collar worker it was still substantial and I will pay for a very long time as we took out a large home equity loan on a property I own as was suggested by the MHCG personnel.

    thank you,
    Sheila

    • Highway Cowboy…first thank you for your comments.

      Sorry you don’t see the value in helping others avoid pain. I would suggest that there is no better source than a former scammer or fraudster to help people understand how it happens and what they can do to avoid it. I regret that the victims won’t get their money back, but they need a voice so that others can profit (not get scammed) from their mistake in judgment.

      I do, however, recognize that there are those who think that once a fraudster – always a fraudster – and that folks like me should be relegated to cleaning toilets with toothbrushes for the rest of our lives. But then that’s their problem not mine.

      By the way – I never said tell me your story and I’ll help you recover your loss. I said, share your story, and perhaps others can learn from that. And, to further illustrate that point, reading stories like that on this blog are FREE so there is no profit for me. Sorry to burst your bubble. Likewise, I said that one may be able to recover some of their loss from IRC Section 165(c)(2) which I provided writing on – again there FREE. Guess you missed the real message there.

      But, thanks for your kind comments about my web site. And, can’t avoid the obvious, as I do pay it back through work with youth in my non-profit organization.

      I wish you well and hope that someday you can look past the obvious anger and see that people who make mistakes can do good.

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    • I have approved Steve Mead’s ad for services here. However, I do not know Steve or endorse his organization. I remain independent of service providers and report on the ethical issues of mine and others actions. I encourage victims of Dryer to seek out competent help and shop so that you feel comfortable with the quality and level of service provided.

  3. Highway Cowboy says:

    Sorry, but you still sound like a scammer – you want to profit from the pain this man inflicted. You know there will be nothing for them – but why not take advantage of their pain for your gain.

    P = Promise = “Tell me your story and I will help you recover your loss”
    I = Illusion = turned around crook helping the masses to avoid being scammed – nice web site – “non-profit” organization
    T = Trust = See illusion

    Give me a break!

  4. Highway Cowboy says:

    Chuck – thanks for your reply. I would classify my feelings as a matter of trust (or lack thereof), rather than anger. I have always been one to trust my fellow man – and I still do by nature. I would prefer to take you at your word, but my experience with Rick Dryer and others like him whose stated goal is to help other people and, oh by the way, stand to profit from said help, has made me, shall we say, a little skeptical. My story with Rick is different than most, I was down on my luck when I met him. His offer to me was a way out of my mess – I worked for him for a year, in one of the many “sister” companies to Mile High Capital that he formed in order to pull of the illusion. He was a very demanding employer – he insisted on the best of his people and he rewarded those who delivered. He did not tolerate incompetence. I trusted him and saw him to be a visionary, and a true leader. His promise did not seem too good to be true (in concept, anyway) – it was based on common sense investing principals – leverage and real estage (who could have predicted the severity of the current mess?). I questioned his business plan as many of us who worked for him did (though Rick acted quickly and severely to snuff out any challenge or critique). However, I still believed that his heart was in the right place and that he was going to do whatever it took to deliver on his promises. I did not understand how deep his lies went until the picture was painted for me by others who were more in the know. I was not alone – there were many fine, honest, and capable people who were likewise fooled (and used) by Rick in order to pull this scam off.
    I feel for the people who lost so much because of him. Had these people been more thorough in their research (most did none) before writing their checks, they would not have invested.
    I sincerely hope your efforts will help others to avoid being victimized.

  5. Thanks for your approval Chuck.

    Just got back to this at the moment.

    Sincerely,

    Steve

  6. shmuelman says:

    I lost money to Mr Dryer. I was an early investor in other of his ventures, where I doubled my money. Had my securities lawyer not dropped the ball, I probably could have been paid back all of my money, but I ran out of energy to sue the lawyer, etc.
    I took a drive with Rick, one of the most personable people I have ever met, to see the Milliken properties. Rick already owed me $18.5K from another investment. I was shocked that he was trying to sell me hard earth, with no visible construction except for a few dozen units, and no construction work going on. A few days later, he sent me some papers to sign. I declined. I limited my losses to about 12K, and I had made about 6k in the past, so it was not too bad.
    I will never be scammed on this level again. If I would have spent $50 on a background check, which I was going to do, I never would have put in $1 with him.
    Never give anyone your money who can deal with it in ways you cannot see or control. Make sure you can stand a 100% loss. Get contracts with timelines for completion or get paid back immediately (it may not help). Know a good lawyer before you get involved in these deals so that you can sue and collect immediately (you may have to return the money in a bankruptcy however). In the case like Dryer’s, due diligence would not be enough – he sucked in successful investors. I was ahead of the game because I could see the futility of his project, and walked away.
    Understand that making good investments is only 1/2 the equation. Limiting losses is the other half, and just as important. Invest in diversified index funds and ETFs with low management fees. Buy stock in Berkshire Hathaway if you can afford it. If you are young, cost average your money every month in the markets with ruthless discipline. Save your money – be frugal. Upgrade your skills if you can. Only buy a house you can afford, otherwise, rent. Get your desires under control; owning stuff will not make you happy, financial security will. Assume everyone who asks you for money is lying – the odds are in your favor that they are. DON’T TRUST ANYONE.
    Chuck, contact me if you care for more info.

  7. Mile High Victim says:

    I lost over $100k to Rick Dryer and his band of criminals. It’s funny how Highway Cowboy can say in the same post that he worked for Rick Dryer and accuse his victims of not doing enough research. If you worked for him and didn’t do anything about it or supposedly didn’t see what was going on, what kind of research were we supposed to do? Tap the phones at Mile High? Subpoena his bank accounts and demand actual copies of all the real estate transactions he had claimed to have made??

    My advice to investors is, Don’t listen to Highway Cowboy. He doesn’t have a very good track record. I agree with Shmuelman. Don’t trust anyone. If you want to be in real estate, do the following:
    1. Learn everything you can about the real estate indusry, even get a license if you have the time.
    2. buy existing real estate, then make your own improvements on it. Don’t by any un-developed property with the expectation of it being built by the seller. Typically the economy and the builder’s situation will change before it’s completed.
    3. Never put down a deposit without escrow.
    4. If you buy before you build, which I wouldn’t ever, never let a builder put a construction loan in your name. It’s their responsibility to build the property and then you can pay when it’s done.
    5. Perform a background check on anyone who you plan to do business with or have any partnership with. This would have prevented my loss to Rick Dryer as well as losses to another person I entrusted.

    I’m sure there are other lessons that can be learned.

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