Grand Junction Real Estate Developers Plead Guilty to Money Laundering Charges
DENVER—Franklin Thad Harris, age 58, and Merlin D. Unruh, age 53, both of Grand Junction, Colorado, pled guilty yesterday before U.S. District Court Judge Christine M. Arguello to money laundering, the United States Attorney’s Office, the Federal Bureau of Investigation and IRS Criminal Investigation announced. Judge Arguello is scheduled to sentence Harris and Unruh on November 10, 2014. Harris and Unruh were indicted by a federal grand jury in Denver on January 8, 2013, for charges of bank fraud and money laundering. The indictment remained under seal until their arrest on January 11, 2013. A superseding information was filed on April 14, 2014.
According to information contained in court documents, including the stipulated facts contained in their plea agreements, Harris was in the business of constructing housing developments throughout the Grand Junction, Colorado, area. In the mid to late 2000s, Harris was involved in the purchase of several acres of land for various planned housing developments in Grand Junction. Financing for the projects came in the form of secured loans from First National Bank of the Rockies (FNBR). Harris’s partner, Unruh, was in the construction business and was the general contractor on building projects with Harris. TDSM was a Colorado real estate development company incorporated in February 2003 and Harris and Unruh were sole members of the board of directors of TDSM. HARRIS was the President and Registered Agent of TDSM. Unruh was Secretary/Treasurer of TDSM. Unruh incorporated and was the registered agent for McGleeson, Inc., a construction company.
In 2010, several construction loans to Harris had become problem loans as they were in default with FNBR. The Special Assets Department of FNBR began to review the loans and identified potential fraud and requested an outside forensic audit which eventually lead to federal law enforcement agencies being notified. Between October 2007 and December 2008, Harris and Unruh obtained loan disbursements totaling $3,718,351.83. They submitting false and fraudulent expense documentation, primarily false invoices, which represented various types of construction work completed at both sites. In fact, much of the work reflected in the invoices had not been performed at the Chatfield site, and no work was done on the Thunder Valley development.
An IRS Special Agent conducted an analysis of the flow of funds and found Harris and Unruh, on numerous occasions, conducted a series of financial transactions after the draw money was deposited into their construction business account. They diverted funds meant to pay subcontractor invoices to private bank accounts and retirement accounts owned/controlled by them and their spouses.
Harris and Unruh each pled guilty to one count of money laundering which carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000 per count.
This case was investigated by agents with Federal Bureau of Investigation (FBI) and IRS Criminal Investigation (IRS CI). The case is being prosecuted by Assistant U.S. Attorney Michelle Heldmyer.