Five people have been indicted in a statewide Ponzi scheme to defraud commercial lenders in Colorado and Arizona.
Attorney General John Suthers said the grand jury issued a 40-count indictment against John Reinholdt II, Heather Cratty, Raina Martin, Mary Ann Hocker and Jon Michael.
The five are accused of using at least 19 businesses to obtain loans from so-called warehouse lenders at interest rates between 5 and 7 percent. The defendants used the capital to make subprime loans with interest rates of at least 11.5 percent to consumers.
The defendants’ business operation appears to have been legal until 2006, when their income became less reliable. From then on, the five are suspected of using new capital, based on paperwork from nonexistent “straw” homebuyers, to pay back interest on prior loans. They also are accused of resurrecting properties in which they no longer had any legal or financial interest to obtain lending capital.
The FBI assisted the state’s attorney general’s office to obtain the indictment. Prosecutors from the attorney general’s office will prosecute the defendants in Denver District Court.