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

February 22, 2009

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!