A 1031 Tax Deferred Real Estate Exchange occurs when a property owner sells investment real estate and uses the proceeds from the sale to purchase other investment real estate. In this case, the property owner does not pay capital gains tax on the sale of the relinquished property provided that the replacement property is of equal or greater value. Section 1031 of the Internal Revenue Code requires proceeds of the sale to be held by an intermediary third party until the replacement purchase is made.
It is alleged that Daniel, while serving as an Intermediary for 1031 real estate exchanges, used client's funds to pay personal expenses and to fund the transactions of other 1031 real estate clients. One investigator described this as a situation of "robbing Peter to pay Paul" and that it caught up to Daniel to the tune of at least $500,000.
When Scoop was first reported missing on Friday April 27th, the belief throughout the Breckenridge community was virtually unanimous that he must have been the victim of wrong doing. Scoop has been a long time resident of Breckenridge and is beloved throughout the small mountain town. He was very active in a local church and did a great deal of volunteer work for a variety of local organizations.
These fears were amplified by information of a silent a nine second 911 call made from Scoop's cell phone on the morning of his disappearance. Daniel also left his dog, car, keys, coat, and hat behind at his office.
That weekend over 150 volunteers, in conjunction with local authorities, conducted an extensive search of the area within a two mile radius of Daniel's office and the nearby alpine trails. No evidence of any wrongdoing or Daniel's whereabouts was found.
At the same time, Breckenridge Police investigated the possibility of Daniel's willful disappearance. Police learned that Daniel had left a paycheck for his secretary on her desk on the morning he disappeared. He had never done this before.
Also that morning, Daniel gave a key for his residence to his girlfriend of five months. She found this odd because he never locked his door. Daniel also gave her some personal belongings which he said he would not need for awhile.
Investigations into Daniel's finances indicated the he is in extreme debt and the he may have been illegally moving money into and out of his Colorado Lawyer Trust Account Foundation (COLTAF) client trust accounts, 1031 real estate escrow accounts, and his business and personal accounts to pay business expenses and personal debt.
On May 1st, 2007 a previous client of Daniel's contacted the Breckenridge Police Department with information regarding a 1031 Real Estate Exchange transaction from a year earlier. The client stated that he had given Daniel over $250,000 in trust as part of the transaction and that when the time came to produce the money, Daniel could not do so, admitting to having used the money to pay other people's 1031 monies and that he was $300,000 in debt. The client also stated that Daniel eventually paid him most of his $250,000.
Since the initiation of the missing person case on April 27th, 2007, the Breckenridge Police Department has been contacted by seven of Daniel's clients indicating that Daniel was holding 1031 Real Estate Exchange funds on their behalf. Information provided by just four of these clients indicates that Daniel should be holding at least $561,571 of 1031 Real Estate Exchange funds in trust accounts. Less than half this amount has been discovered in all of Daniel's various personal, business, and trust accounts. Breckenridge Police expect that records from the remaining three clients, as well as others yet to contact authorities, will widen the discrepancy in coming days.
Despite these recent findings, many members of the Breckenridge Colorado community continue to believe that Scoop would never have created such a situation of his own accord and that he is not a willing participant in it. This is a possibility which authorities have not ruled out.
Copyright 2007 - All rights reserved by Ted Amenta
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