By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
"Pipe Dream Aims for Central City," said a front-page headline in the Denver Post in December 1994. "Tunnel Light Rail Planned for Casinos," announced the Rocky Mountain News that same month.
Many of the thirteen investors who put a combined total of $220,000 into the ill-fated Argo Tunnel scheme are now doubtful they'll ever see their money again, and they're bitter. The Denver brokerage that sold stock in the Argo Tunnel project has closed its doors, and investors have nothing left to remember the project except piles of news clippings that were used to persuade them to open their checkbooks.
While some of the newspaper stories made it clear Harper's scheme was risky, they didn't mention his criminal past. As a result, he was able to spin the articles to investors as proof that the project was bona fide. "I think all the news publicity made me think it was legitimate," says Halvan Jones, an Arizona investor who put $7,500 into the scheme. "The headlines all sounded like it was a real, honest-to-goodness investment deal."
Jones had heard about the rush of players to Colorado's new gambling towns and about the traffic mess on highway 119. Leafing through a stack of news articles, he recites the headlines from newspaper stories sent to him by the broker that sold him on the Argo project: "Train Planned for Argo Tunnel," "Gamblers Jam Narrow Road," "Bus Crash Kills Two," "City Council Gives Argo Project Preliminary OK."
The broker who sent those clippings to Jones, Bob Lanari, declines to speak with Westword. When he sold Jones his shares in the summer of 1995, Lanari was working for a Denver-based firm known as Paramount Investments International. That company folded last March, at the same time it was expelled from the National Association of Securities Dealers. Paramount had a lengthy history of disciplinary actions by the NASD and state regulators. Its license to do business had been revoked in Alabama, Connecticut, Oklahoma, California and Iowa.
NASD records show that Lanari, who has worked at six different investment firms since 1992, has his own history of disciplinary action. He was denied a license by the state of Florida in 1988, which found that his history within the securities industry was "evidence of unworthiness to transact the business of an associated person." He was also suspended from doing business in Iowa for two months in 1985 for selling stock without registering as a broker with the state.
Jones says he last talked to Lanari several months ago, when the broker tried to get him to invest in a Canadian company that's planning to buy the rights to develop the Argo mill and tunnel. "He said they were reliable and honest," Jones recalls.
The Canadian venture revolves around the Vancouver-based Achieva Development Corporation, a penny-stock company that has an agreement to purchase the assets of the Argo Tunnel Corporation. But since the Argo Tunnel Corporation never actually owned the Argo tunnel or mill, its assets consist of nothing more than an engineering study and some promotional materials.
Achieva does have a somewhat more valuable asset: an option to purchase the mill and 340,000 tons of mine tailings from its owner, James N. Maxwell of Littleton. (Maxwell did not return phone calls seeking comment.) A separate agreement calls for that purchase to go through a Cayman Islands shell company known as the Tunnel Acquisition Corporation, which is in turn owned by a Cayman Islands company called Golden Rhino Ltd. and a British Virgin Islands corporation called Dostil Securities Ltd.
Voters in a Central City improvement district recently gave tentative approval to a $34 million plan to pave and improve a gravel road that runs between Idaho Springs and Central City. If implemented, that project would make Harper's vision of transporting gamblers to the casinos through an old mine shaft even less tenable. But the vote hasn't stopped Achieva from promoting the idea of a monorail through the mountain.
In the promotional materials it's now sending to would-be investors, Achieva touts the Argo Tunnel as a potential mass-transit corridor and even includes pictures of a model of the renovated mill with a five-story parking structure and a gleaming monorail exiting the old tunnel. Peter Futro, the Denver attorney whose firm drafted the private-placement documents for Harper's Argo Tunnel Corporation, is the attorney for the Tunnel Acquisition Corporation. Futro also owns shares in Achieva. Despite Harper's indictment for fraud, Futro defends the concept of using the tunnel to run gambling trains. "We've continued to prove up the project," he says. "We've been requested to make sure it's a feasible, viable project."
To add luster to the project, Futro has hired former Denver Republican Party chairman Jack Wogan as a consultant. "We know a market is potentially there," Wogan says. "Fundamentally, the project gets its life from the fact that we believe there's tremendous potential in the Central City-Black Hawk area."
But don't try making that argument to Halvan Jones. He declined the offer to put even more money down the same hole. He figures the money he sank into the Argo is gone forever, and that's soured him on stocks in general. "The news articles made me think this was a viable solution to the traffic problems," he says sadly. "Now I've lost all faith in any investments, to tell you the truth."