The U.S. Attorney for the District of Colorado–along with the FBI’s Denver Division and the IRS’ Criminal Investigation Field Office in Denver–late last week announced that 72-year-old Norman Schmidt of Denver, Colorado, was sentenced by a U.S. District Court Judge to serve 330 years in federal prison and ordered to forfeit more than $38 Million for his role in a fraudulent high yield investment scheme involving more than 1,000 victims.

While Schmidt’s case did not significantly involve real estate-related investments, his unusually long sentence–especially given his advanced age–may serve as a deterrence to the scumbags who violently interrupt the American Dream of Homeownership with their acts of real estate and mortgage fraud.

Schmidt was found guilty on in late-May of 2007, following an eight week jury trial, of conspiracy to commit mail fraud, wire fraud and securities fraud, as well as substantive counts of mail fraud, wire fraud and securities fraud, and separately the crime of money laundering. Schmidt, his wife, and five others were indicted by a federal grand jury in Denver in March of 2004. The wife, Jannice Schmidt, was previously sentenced to serve nine (9) years in federal prison. Three other co-defendants in the case–George Alan Weed of Benton, Illinois; Charles Lewis of Littleton, Colorado; and Michael Smith of Colbert, Washington–are all awaiting sentencing. George BerosPeter A.W. Moss of London, England, remains a fugitive.

According to the evidence presented during the trial, Schmidt obtained tens of millions of dollars from hundreds of investors, and used the money for his and his co-conspirators own personal gain. From April 1999 through April 2003, Schmidt and the others engaged in a conspiracy to commit mail, wire and securities fraud by executing a scheme to defraud investors by implementing a high-yield investment program.

Schmidt, with assistance from others, falsely stated that they would invest victims’ money, promising rates of return from 2-400% per month. To perpetuate the scheme, the defendants sent investors fraudulent monthly statements which falsely reflected the growth of and earnings on their invested funds. The defendants would encourage victim investors to make additional investments, defer disbursements, and refer new investors to the program.

To lure and reassure investors, Schmidt and his friends made false representations that the investments were safe because invested funds could not be moved, and that the investments were insured from loss by various high profile insurance companies. They also misled investors by using false legal opinion letters concerning the status of insurance on investor funds. To further their scheme, they created corporate alter egos through which the investment program was offered. Entities involved in the scheme include the Reserve Foundation Trust, Smitty’s Investments, Capital Holdings, Monarch Capital Holdings, and Fast Track.

The defendants then used investor funds for purposes other than those represented to investors, including for loans or payments to the defendants, personal expenses, acquisition of unrelated businesses and assets, payments to other investors, and the payments of monthly commissions or overrides to members of a network of individuals, acquaintances, and insurance agents recruited by the defendants to obtain new investors in the fraudulent program. Some of the investors’ money was used to purchase the Redstone Castle, which was built around the turn of the 20th century by coal magnate John Osgood. The castle was sold by the IRS at auction in 2005 for $4 million to someone who reopened it for public tours last year.

Also seized during the course of the investigation, was money in approximately 60 bank accounts, and 8 NASCAR race cars, 1 race truck, as well as other race related vehicles and items. In all, federal agents seized assets, including cash and property, worth approximately $24,000,000, which have since been distributed to the victims of this fraudulent scheme through a separate court process. To date over $18,000,000 in forfeited funds have been returned to the victims of the crime.