Take the Money and Run

It took sixteen years and international extradition, but the Colorado Attorney Generalís Office finally got its man.

So Reichman had to resurrect the case and reissue the arrest warrants for Jay and Rebecca Schlaks. And doing that, he says, was "not just a walk over to district court."

By 1996, Reichman was so overloaded with work that he could no longer spend time on the Schlaks case, and it was turned over to James Lewis, who was reassigned from his role as a prosecutor of anti-trust cases to the securities-fraud unit. The extradition of Jay Schlaks became his sole mission.

Lewis started by locating as many surviving victims as he could -- many had moved away or were very old and sick or simply wanted to forget the entire thing. "We literally brought people in from nursing homes," Lewis says. Fourteen victims died between the time he started the case and the time he put it to bed. The remaining eight are still scattered across Colorado.

Bad investment: Jay Schlaks lived in this Humboldt Street mansion while he bilked people out of millions of dollars.
James Bludworth
Bad investment: Jay Schlaks lived in this Humboldt Street mansion while he bilked people out of millions of dollars.

As for those who didn't want to get involved, Reichman says, "Here some jerk from the attorney general's office calls years later, and they're like, 'Oh, goody, why don't you remind me of how stupid I was.' A lot of them just told us to go away."

After Lewis had collected affidavits from those who were willing and able, he sent the paperwork off to New Zealand; an extradition hearing was scheduled for May 1998. But Schlaks's attorney filed several motions to dismiss the case, including one in which he argued that the wrong person had filled out the New Zealand arrest warrant for Schlaks. Lewis had to fly to Auckland to fight these motions. He was successful, and a trial was set for September 1998.

By then, however, New Zealand authorities were already well aware of Schlaks. According to Lewis, Schlaks was operating a business in an office he rented from the Bank of New Zealand. When he asked for permission -- and money -- to add space so he could expand the business, the bank consented. Sometime later, Schlaks approached the bank again, requesting more space. Again the bank agreed. But this time, Schlaks and his contractor agreed to bill the landlord for more work than was done and split the difference -- only Schlaks didn't split the difference with the contractor, according to the attorneys. The contractor wasn't going to let Schlaks get away with stiffing him, so he told the bank what had happened, and the bank filed a criminal suit against Schlaks. He was found guilty and sentenced to nine months in prison in the summer of 1998, but his sentence was suspended on the condition that he commit no other offenses for a year.

When it was time for Lewis to return to Auckland in September for the extradition trial, the first thing he and his New Zealand colleagues had to do was to explain why the case was still viable. It was, after all, fourteen years old, and it had been dismissed once already. The judge wanted to know why the Colorado Attorney General's Office hadn't appealed the earlier dismissal, but since there was no precedent in Colorado for reinstating a case without first appealing its dismissal, "we had to get creative," Lewis says. "Our argument was that the judge mistakenly dismissed the case [during the docket review] because notice wasn't given to the right prosecutor and that because of that, we didn't have an opportunity to be heard."

Finally, Lewis and the crown solicitors found a New Zealand case that had an identical twist: a criminal case that had been dismissed after notice was delivered to the wrong office had been allowed to move forward.

On October 8, 1998, the judge ruled that Lewis had proven his case for extradition. Schlaks was then jailed until January 1999, when a U.S. marshal and two Denver County sheriff's officers arrived to escort him back to Denver.

Before prosecutors were able to put Schlaks behind bars, though, they had to cross another hurdle: In October 1999, his attorney, Darren Cantor, tried to have the case dismissed on the grounds that the attorney general's office had lost evidence and had taken so much time prosecuting the case. "The government usually doesn't screw up this much. They usually don't lose evidence, and they usually don't cheat this explicitly," he says.

Cantor relied on a Colorado law that states that when one side destroys or doesn't produce evidence that is helpful to the other, the case can be dismissed. Although Lewis argued that the only side injured by the absence of the original bank records was the prosecution, Cantor countered that "because they'd been thrown out, I couldn't hire an accountant to look at those records to even say if they were helpful or not."

Cantor also questioned why the attorney general's office didn't try to extradite Schlaks a second time until eight years after the original attempt failed because of a mere technical error surrounding the affidavits. "They have their excuses, like someone left the office, but you know what? I don't buy that. If this case was so important, why did they wait so long? Jay was going by the same name, and he was living in the same country, at the same address; it's not like he was in hiding."

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