A Utah entrepreneur accused of running a Ponzi scheme to expand a U.S. network of luxury event-rental venues was ordered to surrender a chunk of the proceeds from the sale of his $2.4 million home while jilted investors pursue their legal claims against him.
U.S. District Judge Tena Campbell in Salt Lake City issued a so-called writ of attachment to $845,000 from the sale of the property owned by Noah Corp. founder William "Bil" Bowser in the ski-resort town of Park City. Noah and Bowser are among those sued by retirees who invested millions of dollars in one proposed rental facility in Carmel that was never built.
The ruling is the latest in a dispute that pits hundreds of investors against Bowser, his family and Noah, which filed for Chapter 11 bankruptcy protection in May. The plaintiffs claim he used money from new investors to pay off earlier ones, while soliciting wealthy retirees keen to avoid taxes and generate income from luxury venues rented out for weddings and corporate events.
“Plaintiffs contend that the defendants were operating a Ponzi scheme because the defendants, and particularly Mr. Bowser, were using funds from new investors to cover costs for projects and lease payments to earlier investors,” Campbell said in her order on Monday. While the judge has yet to rule on the claims, she said the “plaintiffs have established the likelihood of success” in their allegations of unjust enrichment by Bowser and others.
Bowser was ordered to deposit about $348,000 with the court, and another $497,000 earmarked for the purchase of a townhouse was encumbered by the writ, according to court records.
In April, about a dozen investors who put up a combined $4.9 million to build a high-end Noah event venue in Carmel filed a lawsuit after learning that the facility was never constructed. They alleged the cash was used on other projects and operations at Noah’s Utah headquarters. The Carmel site is vacant, court records show, and Noah filed for bankruptcy a month after the suit was filed.
Reed Rawson, one of the attorneys who represents Noah and Bowser, didn’t immediately return a call for comment.
Bowser raised an unspecified sum from investors to build an estimated 42 facilities from New Hampshire to Florida to Utah. Many now claim Noah raised far more money to build the structures than they are actually worth.
Campbell said Monday it was too soon to rule on the investors’ claim about a Ponzi scheme, which could result in all financial transfers from Noah to Bowser’s construction company, Gabriel Management Corp., being deemed fraudulent. Under Noah’s expansion strategy, small groups of investors teamed up to own individual venues in 25 states, with Noah as their guaranteed tenant.
The judge noted that Bowser, in earlier court testimony, had “unilaterally” decided to redirect the money that was raised to build the site in Carmel.
“When asked at the hearing why he did not use the Carmel investors’ money to develop the Carmel project and keep that project on track, his only answer was that he put the money where it was most needed to keep those projects afloat,” Campbell said. “In essence, he said something to the effect of, ‘you do what you have to do.’"
Bowser also told investors during a conference call in May that he was “robbing Peter to pay Paul,” according to the judge’s ruling.
Bowser hasn’t filed for personal bankruptcy, and the case may give the group of investors greater access to his assets. Hundreds of people who invested in other Noah sites, as well as shareholders in the Noah parent company, are scrambling to recover their investments in bankruptcy court.