Longform

Smooth Operator

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Gene Kelley was a natural-born salesman. He left his native Oklahoma to serve in the Navy and eventually ended up in Texas, selling insurance. At first he worked for an established insurance company, but he later broke away to start his own company.

Various court records show that Kelley has a history of financial difficulties (Kelley himself could not be reached for comment for this story), and in November 1987 he declared himself personally bankrupt. Kelley was discharged from his debts in May 1988; six months later he moved to Colorado.

People who have met Kelley describe him as folksy, with a rugged demeanor and a preference for Western wear. According to his former wife, Mary, Kelley "was always a good seller."

He picked up in Colorado where he'd left off in Texas, peddling supplemental health-insurance policies to retirees. In early 1989, Mary says, a friend of one of his sons told Kelley about the pay-telephone business.

"It just sounded appealing--you know, having machines out there working for you," recalls Gene's oldest son, Michael. Kelley soon began pouring the foundation for his own company while making his insurance-sales rounds.

Explains Michael, "We just went to every one of our policyholders and said we'd like to borrow some money if they were interested." More specifically, adds one acquaintance, "Gene needed money, and so he went out and raised several hundred thousand dollars from old ladies."

Addresses of the creditors left holding pieces of Peak when the company went bust show that Kelley was busy soliciting people not only in mountain communities but also along the eastern Plains, the Western Slope, and from Pueblo, Alamosa and Granby. The list of investors also hints at their ages. Many of the company's creditors are trying to recoup their money through family trusts, indicating that the original investors have passed away.

John Baker, a Granby lawyer, represents the Willian Olsen Testamentary Trust. He says his former client died a year ago at the age of eighty--but not before handing over $2,000 to Peak Phone in 1990.

"She was quite elderly when he got in touch with her," Baker recalls. "And I use the term 'investor' loosely. She was taken advantage of by this pay-phone company. If I were having a private conversation, I'd use stronger language. But we'll leave it at that."

Seventy-year-old Norbert Commes, a retired mine worker from Leadville, also invested in Peak Phone. "Mr. Kelley would come to Leadville every once in a while," Commes recalls. "He got involved with the senior citizens there, selling insurance and so forth. We have a dinner at the senior center every Tuesday and Friday, and he'd drop by and eat with us every now and again.

"He approached me one time and asked me if I wanted to invest with Peak Phone Service. I had a little money--of course, it was money I had saved my entire life. I stuck twenty grand with him. A few months later he came back and asked for more, and I gave him another $23,000. He was a real nice fellow."

Commes says he signed away his money for a five-year period and that during that time Kelley diligently paid the 12 percent interest he'd promised. "But after the five years was up and I asked him for my money, he said that would really put him in a bind," he recalls. "I kept calling his son in Frisco, and Michael Kelley eventually sent me $10,000. But the other $33,000 I couldn't get.

"It's been a long time," Commes concludes. "I can never get ahold of them."
Another Peak investor, Cecelia Foreman, worked most of her life in Leadville's Delaware Hotel, beginning as a maid in the 1930s. "Back then it was just a mercantile on the ground floor, with rooms on top," she says. She retired several years ago.

"In 1990," Foreman recalls, "the Kelleys came to my house and laid out a program that sounded pretty good. So I invested some money. I don't know how they got my name and address. They had an interest rate that sounded good and--I don't know--it just happened."

Like Commes and most of the other investors, Foreman gave Peak her money for five years. Again during that time, the Kelleys paid interest on Foreman's investment, which she remembers as coming to about $30 a month. In 1995, she says, "I needed some extra money, and since it was past five years, I asked for a lump sum back. And they just didn't have it. They avoided any phone calls after that. They still owe me about $3,000 plus interest."

Kelley and his sons started Peak Phone with about two dozen phones. Within a couple of years the number had grown to 200, and then 480. The fact that Peak operated for five years and that during that time Kelley made regular interest payments to his investors may indicate he was in the pay-phone business with serious intentions.

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Eric Dexheimer
Contact: Eric Dexheimer