When Ark Valley Voice wrote the January 28, 2020 story about former Salida City Attorney Ben Kahn being named as co-conspirator in GDA Real Estate Services Securities Fraud Case, we learned the ramifications went far beyond our rural Colorado county, or Denver, for that matter. Just how far, we really had only an inkling.
Two years later, it appears that the United States Department of Justice knows a lot more about what went on.
Lady Justice. Courtesy file.
This past week, the United States Department of Justice announced that it is finally proceeding with the federal case against Marlin Hershey, and Dana Bradley who live in Cornelius, NC, near Charlotte. The two men are charged in in connection with the multi-million dollar investment scheme. Gary Dragul, of Cherry Hills Village, CO is awaiting charges here in Colorado.
They are the lead characters in a fraud case in which they continued to sell investment shares in a real estate deal (amounting to 194 percent of the shares, nearly double what was actually there to be offered), soliciting new investors for a shopping center project. Contrary to representations they made to the investors, they used the new investors’ money to repay the loans and previous investors. Dragul, who used to own Writers Square in downtown Denver, has never held a securities license in Colorado.
To cover their tracks, they allegedly sent periodic glowing reports to investors about the status of the investments, hiding negative information. They then sold the entire shopping center investment without telling the investors and pocketed the profits; while telling investors it lost money because it failed to attract a big-box retailer.
In 2020, Kahn was named as one of four co-conspirators in the securities fraud case, for his alleged involvement in hiding GDA assets from the receivership that is attempting to recoup investors’ money. There are victims across several states, including family and friends in Colorado, North Carolina, Pennsylvania, and Florida.
According to a news story in The Denver Business Journal in 2018 when Dragul was first charged, Dragul’s attorney with Brownstein, Hyatt, Farber Shreck, said, “Gary Dragul has been a successful businessman for more than 30 years. He strongly denies the allegations in this case and we expect that he will be completely vindicated.” Kahn worked for twelve years in the Litigation Department at Brownstein Hyatt Farber Shreck, where he met Dragul.
According to a news release from the United States Department of Justice Western North Carolina Office, since 2020, it appears that Dragul has attempted to liquidate his various companies, causing some of the assets named in the securities deals to “appear to disappear”, swindling the victim-investors of hundreds of millions of dollars.
The criminal indictment against Marlin Hershey by a federal grand jury was unsealed on April 22 in a court in North Carolina. Find the news release at: https://www.justice.gov/usao-wdnc/pr/two-men-are-facing-federal-charges-connection-multi-million-dollar-investment-scheme
The receiver’s counsel successfully argued that the securities fraud case on behalf of investors should once again move forward against Dragul and Hershey as well as the professionals who aided and abetted them in their fraud. Marlin Hershey and Dana Bradley, both 52, were charged with mail and wire fraud conspiracy, mail fraud, securities fraud, and money laundering conspiracy. The hearing ended a nearly year-long delay triggered by Dragul’s appeal and motion practice. Hershey’s attorney appeared and argued along with Dragul’s, but unlike Dragul’s counsel who acknowledged the status of the criminal case, Hershey’s lawyer was silent as to the fact that his client now also faced a parallel criminal proceeding.
The Arapahoe County District Court in Colorado granted the defense motion to continue the two-week trial in Case No. 2018CR1092 which was originally scheduled to begin in June, 2021. Then in December 2021, over the state’s objections, the court again reset the trial for the Colorado defendants; moving the two-week trial to June 6 to June 17, 2022.
There is no mention of former Salida City Attorney Ben Kahn in these most recent charges, although in 2020 he was named as a co-conspirator in the GDA Real Estate Services Securities Fraud case (http://www.dragulreceivership.com). But Case No. 2019CR610 is currently trailing the case of 2018CR1092, and that trial date will be set at a future date.
Ark Valley Voice has been in touch with Scott Rockefeller, who had invested in the real estate scheme, and who testified before the Colorado Grand Jury regarding the case two years ago. Although Hershey is connected to Dragul, it appears he was also running his own scheme that was independent of Dragul.
Rockefeller points out that “This is important to Denver readers because it shows how massive this alleged fraud is with Dragul and that, although he was the mastermind, Marlin Hershey was key in introducing investors like me to Dragul and allegedly taking undisclosed commissions from Dragul … all the way across the country where Hershey resides in North Carolina.
“Sadly, I was Marlin Hershey’s brother-in-law for many years that the alleged scheme was carried out,” he added.
Well, that puts a certain spin on the value of family relations.
News media in North Carolina have picked up the recent developments in the story
Charlotte Observer (April 22, 2022): Lake Norman mansion owner swindled millions of dollars from investors, feds say
WSOC TV Charlotte (April 22, 2022): Pair from Cornelius facing federal charges in connection with multi-million dollar investment scheme
Cornelius Today (April 22, 2022): Bradley, Hershey charged with securities fraud, money laundering | Cornelius Today
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