By Jonathan Shikes
By Michael Roberts
By Jonathan Shikes
By Michael Roberts
By Michael Roberts
By Michael Roberts
By William Breathes
By Melanie Asmar
Robert Brown still remembers hearing the name Christian Lawless Harper on the radio in the summer of 1995.
The Colorado Bureau of Investigation agent hadn't forgotten the day he arrested Harper more than twenty years ago for interstate transportation of stolen vehicles. When Brown heard Harper's name on the tail end of an ad soliciting investors in a plan to run a monorail through an old mining tunnel between Idaho Springs and Central City, it got his attention.
Brown first met up with Harper in 1972 when, as a Vail police officer, he pulled Harper over during a traffic stop on Interstate 70. The young officer soon discovered that Harper was on the lam from a federal prison in California--and Harper's reputation as an escape artist was confirmed when he broke out of the Eagle County jail and headed for Denver, where he was arrested again in 1973.
Brown hadn't seen Harper since, but when he heard the radio announcement, he knew the ex-convict was back in business. And judging from the ad, Harper's latest endeavor was a doozy. The gambling fever that engulfed Central City and Black Hawk in 1991 had brought on a rush of real estate developers, and Harper had joined the stampede with a bizarre proposal to run trains from the former Argo Mill in Idaho Springs through an abandoned mine shaft into Central City. The plan was touted as a bold way to deal with the stream of traffic overwhelming state highway 119. With his wife, Cheryl, and three other partners, Harper launched a highly visible pitch for investors, running ads and even getting written up on the front page of Denver's daily newspapers.
It was a daring gambit on the part of the 48-year-old entrepreneur. In the last two decades Harper has transformed himself from a car thief into a suave financier who lunches with millionaires and frequently travels on business to Europe. He has gone from fleeing the law on American interstates to racking up frequent-flier miles on flights across the Atlantic. But many of those who've done business with Harper say that while he may have traded in jeans and a T-shirt for tailored European suits, he's still the same old con artist.
Harper's Argo Tunnel scheme was floated just a few days before Christmas 1994. For much of the next year, Santa Claus was a frequent visitor at the posh Harper residence, and he wasn't bringing lumps of coal. Harper raised nearly a quarter of a million dollars from investors in a private placement for the Argo Tunnel project. When he began advertising a planned $5 million penny-stock offering on local radio and cable-television stations, he was inundated with nearly 3,000 inquiries.
But the affable financier portrayed in the news media now looks more like Scrooge to his investors. Last month Harper was indicted by a Jefferson County grand jury on two felony counts of securities fraud. The indictment charges that the Argo Tunnel project was a scam and that Harper lied to investors about the ownership of the mine and commitments from the city of Idaho Springs. Harper also allegedly neglected to tell his investors that he had served time for felony auto theft in the 1970s--or about his multiple escapes from detention facilities.
The indictment also says Harper misrepresented the credentials of his partners, failing to tell investors that Marc Brink, who is listed as president of the Argo Tunnel Corporation, had worked primarily as an auto mechanic; or that Charles Beck, the company's chief operating officer, was a former attorney who had been disbarred by the Colorado Supreme Court for misuse of client funds and had most recently worked as a taxi driver; or that Michael Meenan, the chief financial officer, had been involved with a casino--the Cracker Factory--that went belly-up.
Authorities say the money raised for the Argo Tunnel scheme was never spent on the project but instead went into Harper's pocket. And Harper apparently wasn't afraid to spend it. Until last year he and his wife enjoyed a lifestyle befitting Donald Trump. They lived in a $1.6 million house next to the Pinehurst Country Club in southwest Denver. The 15,267-square-foot home is known as the "Pagoda House" because of its distinctive slate roof and lavish Oriental gardens. With a 2,400-square-foot master bedroom, eight baths, an indoor/outdoor pool known as the "blue lagoon" and features like a shower room with black marble floors and a chandelier, the mansion next to the links certainly looked like the kind of place a big-time developer would call home.
But at the same time the Harpers were living the high life, court records show they were bouncing checks at Safeway and Target. The deed on the Pagoda House was in Cheryl Harper's name, and the former owners of the house forced her into Chapter 7 bankruptcy in July 1995, claiming the Harpers owed them $671,000. Court documents show that the couple is in debt for more than $800,000, with creditors that include SoFine Limousine, Warehouse Liquor Mart, the Cottonwood Riding Club and the Internal Revenue Service.
The Harpers' luxurious lifestyle has apparently ended, at least for the time being. They had to leave the Pagoda House and are living a more modest lifestyle in Denver, awaiting Harper's next trial date. In January Harper will be back in court, and his attorney, Chris Cross, will ask a Jefferson County judge to dismiss the two securities-fraud charges for lack of evidence. In the meantime, Harper's entrepreneurial zeal shows no signs of letting up. He's since cut a deal to sell the assets of his company to a Canadian firm that's directing a sales pitch to many of the same people who contacted him after he advertised the Argo Tunnel project. That firm plans to buy the assets of an abandoned Idaho Springs gold mill and tunnel with a familiar name: Argo.
Idaho Springs city council meetings aren't usually noted for their theatrical nature. But the show Harper put on for the council in 1994 was a four-star event, complete with a promoter flown in from Las Vegas.
"They scheduled a meeting in city hall," recalls Idaho Springs mayor Bill Macy. "They spent some money on it. There were suits from everywhere."
The presentation even included a computer-generated video showing the 1893 Argo Tunnel reborn as a mass transit system. To top it all off, legendary Las Vegas high roller Clifford Perlman, the onetime owner of the Caesars Palace casino, put in an appearance. A self-styled deal-maker who got his start selling beer-steamed hot dogs on the beach in Miami, Perlman apparently met Harper in Las Vegas and agreed to lend his name and prestige to the Argo proposal, claiming Nattem USA Inc., a company he controls, would be a major investor.
Since the proposal called for Idaho Springs to issue up to $45 million in municipal revenue bonds to fund the $50 million venture, the position of the city was critical. Macy says the council decided to take a wait-and-see attitude toward the idea.
"We're a small community without much staff," says the mayor. "We sent Harper a letter saying, 'We need proof of ownership, and you have to provide the impact study.'" Idaho Springs also told the promoters they would have to pay a $5,000 application fee.
The town never got the $5,000. Macy says the council didn't take an official position on the venture and never held public hearings. "We didn't say no and we didn't say yes," adds Macy. "We never even voted on anything."
But that didn't stop Harper from claiming that the city had made an initial commitment to issue the bonds. That claim is what led to Harper's indictment for securities fraud. Brown says his investigation into the Argo Tunnel scheme was prompted by a call from former Idaho Springs police chief Stu Nay in July 1995--about the same time Harper and his cohorts began advertising the project in the media.
"He contacted the CBI and said, 'We're concerned because they're suggesting Idaho Springs is supportive of this project and we're in some way going to assist with the project,'" recalls Brown.
Idaho Springs residents have seen hustlers come and go for more than a century, and their initial caution toward the project proved to be justified. Just a few months after Perlman made his splashy appearance, the gaming king, who sold his shares in Caesars Palace in the early 1980s after New Jersey gaming regulators issued a report suggesting he did business with reputed mobsters, was dropped from the Argo project. Harper told the news media he jettisoned Perlman after the flamboyant executive failed to come through with promised financing, a claim Perlman denied. (Perlman could not be reached for comment.)
The Argo Mine's status as a Superfund site also raised eyebrows in the old mining town. The 4.2-mile tunnel was built in 1893 to serve several mines that crisscross the rugged mountain range between Idaho Springs and Central City. A small electric ore train ran the length of the tunnel, collecting ore from a half-dozen mines that intersected the tunnel and moving it to the Argo Mill for processing. The tunnel also drained the mines of thousands of gallons of water contaminated with toxic chemicals that leached off mine tailings.
Those dangerous chemicals--including copper, manganese, zinc, arsenic and cadmium--spew out of the mine into Clear Creek in water that's flowing at a rate of 200 gallons a minute. The federal Environmental Protection Agency is now building a water-processing plant to filter the water before it contaminates Clear Creek, but the outflow would have complicated any serious effort to run a passenger train through the old tunnel.
"What you've really got is a hole in the ground with massive environmental problems," says the CBI's Brown. "But what sells is an 1893 mining tunnel--it's sexier than hell. People think the tunnel is already there and all you've got to do is put in a gondola. Harper was selling the sizzle, not the steak."
But however improbable the Argo Tunnel may seem as a site for mass transit, Harper certainly managed to get the proposal into the news. The charming promoter knew how to spin a story, and the Denver news media quickly latched on to his bizarre investment scheme. Harper has refused to talk to Westword for this story. But the suddenly mute businessman wasn't always media shy.
"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."
Christian Lawless Harper is aptly named, according to some former business associates.
Flaherty's client, Charles Myers, owns thousands of shares in a Southern California company Harper promoted, Renaissance Golf Products Inc. That company raised as much as $7 million through an initial public offering in 1992, but its stock is now next to worthless. In an attempt to recoup his losses, Myers filed a legal claim known as a trust deed for $1.3 million on the Pagoda House, but that effort went nowhere. He also sued a company controlled by Harper that later declared bankruptcy.
Documents on file with the federal Securities and Exchange Commission show that, for the six months ending June 30, Huntington Beach-based Renaissance sold $1.2 million in golf clubs and accessories, compared to $2.9 million in sales for the same period in 1995. "This decrease is due mainly to lack of sufficient capital to fund inventory purchase requirements," says one document. The report also shows that shareholders took a bath--it lists the total deficit in stockholders' equity at $11.9 million.
Harper's critics say a pattern of disappearing assets is a common one in his career. In October 1995, a $12 million default judgment was entered against Harper and others by a Superior Court judge in Los Angeles. That case, known as the Northstar Minerals deal, involved more than 600 people who invested in sixteen limited partnerships created by Harper and several cohorts. All the partnerships were based in California and were supposed to be buying oil and gas properties. Instead, according to the plaintiffs in the lawsuit, millions were invested in shell companies without any assets. The suit alleges that one limited partnership paid Harper $1.5 million for coal mines in Kentucky that he never owned, as well as $501,000 for "expenses."
"The money disappeared, and so did Harper," says a California attorney involved in the case, who asked not to be named. "He left right after he got the money. He sold the company things he didn't own and then split. That's his modus operandi." The attorney adds that the plaintiffs don't expect to see their money again, despite the judgment in their favor.
Harper is no stranger to the court system. According to a motion for bond reduction filed by his own attorney, he was first charged with a felony when he stole a car at age fifteen. Harper has told law enforcement authorities that he'd been fighting with his father and started stealing cars as a way to rebel. He also rebelled by escaping every time authorities rearrested him--in the words of his attorney, "choosing to avoid prosecution." After escaping, Harper kept on stealing cars and drove some of them across state lines, which landed him in the federal prison in Lompoc, California, in the early 1970s. He escaped from Lompoc in 1972 and fled to Colorado, where Brown caught up with him.
"I've arrested a lot of people in my time, but I've never forgotten his name," says Brown.
After wrapping up his federal prison sentence in 1975, Harper apparently turned over a new leaf--or at least moved into a more sophisticated line of business. He told acquaintances that he began reading the Wall Street Journal while in prison and also met several successful white-collar criminals there. After learning the ins and outs of the penny-stock game, Harper eventually became so good at it that he was able to live the life of a multi-millionaire. A slender man with graying hair and a deep voice, Harper dresses impeccably, favoring tailored suits, silk ties, cuff links and freshly polished loafers. He looks like someone who'd be right at home in the first-class cabin of a Swissair jet, a style appropriate to a man who has made numerous trips to Europe.
Harper has done business with Swiss merchant banker Michael Harrop, whose name appears on the sales brochure given to investors in the Argo Mine project. In the private-placement document for Argo, Harper said that since 1988 he had directed U.S. operations for the merchant banking firm of Harrop et Cie. That job, he said, required that he be "responsible for all merchant banking investments, merger and acquisition projects and investor relations in the U.S." Because European tax rates are much higher than rates in the U.S., many wealthy Europeans are eager to hear about potential tax shelters in this country, and Harper has learned how to make pitches to those investors.
Indeed, Harper has told friends that he was invited to join a U.S. Commerce Department junket in 1994 to meet some of the wealthiest investors on the Continent. Acquaintances have told authorities that Harper was embarrassed midway through the trip when he ran out of money and had to scramble to find the funds to pay his way back to the States. A spokeswoman for the Commerce Department in Washington, D.C., says that agency has no record of Harper being invited to join any formal trade mission.
Harper's suave appearance and aggressive approach have allowed him to thrive in the through-the-looking-glass world of penny stocks, where it's often almost impossible to tell the scams from the legitimate investments.
Highly speculative in nature, penny stocks appeal to investors hoping to make a killing in a short period of time. In the 1980s Denver was a major center for the penny-stock industry, but those days came to an end after a scandal brought down Meyer Blinder, Denver's penny-stock king. The elderly Blinder served forty months in federal prison after being convicted of racketeering, money laundering and securities fraud in 1992. Blinder helped deceive investors as part of a $25 million offering for a company that held no assets and had no business purpose.
The uproar over that and other penny-stock ripoffs led the SEC to crack down on the penny-stock business. That sent many promoters scurrying over the border to a Canadian city that's become an important penny-stock center: Vancouver.
Securities regulation in Canada is much looser than in the United States, and that's made the Great White North a favorite destination for penny-stock hustlers. "A lot of activity has moved to Vancouver," says Colorado Securities Commissioner Phil Feigin. Vancouver always had an active penny-stock market, Feigin adds, but it never attracted much attention until American authorities clamped down on activity here.
When he was indicted in October, Harper was actually in Vancouver, where he was working as an investment advisor for Western States Consultants, a penny-stock firm. He returned to Colorado and was allowed to post a $25,000 bond.
Feigin says some penny stocks are for legitimate but risky business ventures, while others are based on nothing but hype. The first phase of a penny-stock offering is often purchased by insiders. "Virtually anyone buys a penny stock in the belief the price will go higher," he says. "They're trying to get in on the ground floor."
Many sophisticated investors will even invest in private-placement offerings they know are scams, on the assumption they can make a quick profit when the company goes public, selling their shares before it becomes obvious the business is a fraud. "There's a greater-fool theory," says Feigin. "There's always somebody down the road who will be even stupider than you are."
Feigin says the bull market of the past few years has made some investors overly confident. He cautions those interested in high-risk investments to tread carefully. "If you're dealing with a start-up company with wild ideas, red flags should go up," he says.
Harper intended to take his Argo Tunnel scheme public after completing the private placement. Under SEC regulations, private-placement solicitations--known as regulation D offerings--are limited to people who already have a business relationship with a broker and have substantial cash reserves. The intent is to protect inexperienced investors.
After wrapping up the private-placement offering, Harper was planning to return to the market and do a regulation A offering for $5 million to the general public. For example, he could have pitched shares to the 3,000 people who responded to the radio and television advertising campaign.
But by last summer the CBI's investigation of the Argo Tunnel scheme was under way, and Harper and his cronies dropped the planned public offering. Their opportunity to make a quick fortune also probably vanished.
For now, all that's left of Christian and Cheryl Harper's once-lavish lifestyle is a lengthy court record, including lawsuits from sundry creditors. Legal actions against the Harpers include a December 1990 suit filed by Stevinson Jaguar, alleging the Harpers wrote a bad check for $35,000 on an account at the Royal Canadian Bank. The 1990 Range Rover they purchased with that money was repossessed by order of Denver District Judge Lynne Hufnagel.
In 1992 Harper was arrested in Cherry Hills Village after a contractor working on his Viking Drive home claimed he had given him a bad check for $75,000. The home was in the process of being foreclosed on by Aurora National Bank. Harper later pled guilty to a class-three misdemeanor for writing the check.
The pressures of the CBI investigation may have taken a personal toll as well. In August of 1995 Christian Harper was arrested on a domestic-violence charge, after he allegedly assaulted Cheryl at home. He was also charged with flourishing a weapon. Both charges were later dropped.
Despite his repeated brushes with the law, Harper remains free to travel. He won that privilege when his attorney successfully convinced a judge that Harper hasn't tried to bolt from police since he was a young car thief. "That [earlier] immature behavior was severely punished," Cross noted in his motion for bond reduction, and since then Harper has been more willing to show up in court. After all, the attorney wrote, Harper came back to Colorado to stand trial after he was arrested in New York on the bad-check charge from Cherry Hills Village.
Today, the attorney added, his client needs to travel to earn a living, including taking trips to places like Vancouver. And with the commitment from Achieva to buy out the Argo Tunnel Corporation assets, Harper clearly hasn't given up on selling the bright future of the Argo Mill. To this day, visitors to the mill receive no inkling that anything's amiss with the fantastic monorail project that landed Harper in front of a grand jury.
The bright-red five-story building is something of a landmark along Interstate 70, and for $10, anyone can tour Maxwell's mill and the old mine. A scale model of the Argo project still sits in the gift shop, showing the massive parking structure next to the mill and the gleaming monorail heading off into the mountain.
The guide who takes visitors through the mill and tailings pile is still enthusiastic about the Argo Tunnel project. "This will be the site of a five-star hotel, parking structure and train to Central City," he tells an astonished group of tourists, adding incorrectly that an "eastern investment group" has bought the old mill.
The two-foot-wide tracks that carried the ore carts into the Argo Tunnel are still there, as is a rusted-through ore train complete with a beat-up locomotive. Part of the mill has become a home for pigeons, but visitors can still see the crushers and holding tanks that made the Argo Mill one of the largest gold mills in the world. Today the wind whistles through the mill's thin wooden walls, but it isn't hard to imagine the racket that would have been produced by tons of ore being dumped out of carts, ground and pulverized to extract gold.
The grounds around the mill are now littered with the mining implements nobody else had any use for. "No trespassing. Violators will be shot and burned at sunrise," announces a sign on the fence.
A truck driver from Iowa who stopped for the tour looks at a visitor and smiles. "I think all the gold is gone from this place," he says with a shrug.