Securities Commissioner wins appeal related to $15.25 million Ponzi scheme
DENVER — A Colorado Court of Appeals has reversed an earlier trial court decision on an appeal filed by Securities Commissioner Gerald Rome. The appeal concerned the Commissioner’s civil charges against Antonio Reyes, Craig Kahler, and Betty Schnorenberg. The three listed defendants are accused of playing roles in the $15.25 million dollar Ponzi scheme allegedly perpetrated by Lone Tree resident Kelly Schnorenberg, who is currently awaiting a criminal trial.
A Denver District Court had previously found that it did not have personal jurisdiction over these out-of-state defendants, and dismissed the defendants from the civil case. However, upon review the appeals court reversed the decision in favor of the Commissioner.
The Division of Securities, part of the Department of Regulatory Agencies, alleged that Schnorenberg hired Reyes, a California resident, and Kahler, a Wyoming resident, to solicit investor funds for his company, KJS Marketing. As salesmen, Reyes and Kahler directed out-of-state investors to Schnorenberg. According to the allegations, the investment scheme was a fraud. Instead of directing most funds to insurance sales companies as promised, Schnorenberg allegedly converted the investments to personal use, or otherwise distributed the funds to his mother, Betty Schnorenberg, or prior investors in a Ponzi scheme fashion. Meanwhile, Kahler and Reyes received commissions on their sales. Betty Schnorenberg lives in Wyoming and the Commissioner filed a claim against her to return the approximately $1.1 million of investors’ money sent to her by her son. In total, the Division is alleging that Schnorenberg and associates took in approximately $15.25 million from at least 255 investors.
“The message from the Appeals Court is clear that promoters of Ponzi schemes in Colorado cannot evade enforcement actions by operating outside of Colorado. The protections afforded to investors – whether they are from Colorado or otherwise – extend to conduct occurring outside of Colorado if the salesmen are acting in furtherance of the fraudulent scheme occurring here,” stated Rome. “Therefore, we are pleased that the appeals court saw fit to allow these proceedings to move forward in an effort to attain justice for the hundreds of victims of this scheme.”
Please note: The criminal charges listed in this document are allegations. Defendants are considered innocent until and unless proven guilty in a court of law.