Man convicted of luring investors to Colorado real estate scam now leads financing of $100 million Wisconsin redevelopment project


Riverlife Village site
Provided by Wausau Pilot & ReviewRiverlife Village site

More than 10 years after a former Denver man was charged with securities fraud for his role in an $8.3 million real estate scam, he continues to make monthly restitution payments to his victims.

But Jason Sharkey’s criminal background hasn’t stopped him from becoming a key player in an $80 million to $100 million riverfront redevelopment project in Wausau, Wis., that’s funded in part by city money, according to records from the U.S. and Canada.

The first phase of Riverlife Village is now under construction on 16 acres of city-owned land in Wausau, a community of about 39,000 people 100 miles west of Green Bay, with Sharkey running the project’s financing through a company he founded called Quantum Ventures.

“That’s insane. That’s just crazy, that’s what that is,” said Broomfield resident Thomas Severino Jr., one of many investors lured into the Colorado scam by Sharkey. He and his wife invested $40,000 with Sharkey, who still sends them about $15 per month in restitution.

Neither Wausau Mayor Robert Mielke nor economic development director Christian Schock, returned calls about Sharkey’s background.

Sharkey, 41, acknowledges his criminal case in Colorado, but explains that as the regional vice president of a Canadian real estate venture, he too was a victim of the elaborate fraud. He said he and his wife lost $134,000 in the deal.

“I never knowingly lied about the fund,” Sharkey said in a written reply to a series of questions from The Denver Post. “I fully cooperated with the state of Colorado in this matter as I did not knowingly take investors’ money for a fraudulent fund or intentionally try to steal money from the company or investors.”

Shereen Siewert, publisher of the Wausau Pilot & Review, has written a series of articles exposing the questionable credentials of key developers involved in the Riverlife Village project, which Sharkey’s company became the development lead for in January.

Siewert — with help from The Denver Post — also uncovered the criminal case in which Sharkey was ordered to repay $692,642 to victims.

Jefferson County criminal records and U.S. District Court documents indicate Sharkey courted Colorado investors on the golf course, promising high yields on their money.

At the time Sharkey was serving as vice president of Klytie’s Global Real Estate Fund based in Calgary, Alberta, Severino said. Klytie’s owners hired Sharkey with salary of $52,000 annually in 2005.

When Severino requested an audit of Klytie’s financials, a Christopher L. Klaus of KPMD Financial Services of Toronto emailed a financial report. But Severino later learned Klaus was fictitious and the company didn’t exist.

On Aug. 25, 2005, Sharkey organized a golf tournament at Heritage Eagle Bend Golf Course in Aurora to raise money for Gilda’s Club Worldwide, a nonprofit organization supporting cancer patients that was founded in honor of actress and comedian Gilda Radner, who died of cancer in 1989. During the tournament, Sharkey guaranteed investors a 10 percent return on whatever sums they put into Klytie’s, court records show.

Sharkey’s boss, Hidai Friedman, told investors his wealthy uncle in Israel directed the company. Friedman also told investors the company owned properties in Panama, the Cayman Islands and Israel. All the company needed, Sharkey told investors, was a bank and the company was negotiating to buy one in Phoenix, the lawsuit says.

Sharkey met investors in the Cayman Islands, where he showed them beach-front housing developments he claimed were Klytie’s projects, court records show. A company brochure boasted the company had 14 parcels around the world worth $52 million, and it also claimed to build low-cost housing in developing nations.

But investors grew frustrated when Klytie’s failed to provide them with basic tax forms and other information.

When Sharkey learned in late 2006 that the company was under investigation in Colorado, he resigned, he said in the email to The Denver Post.

“Being an investor myself, I was just as surprised as anyone when the full extent of the Friedmans’ fraud was revealed,” he wrote.

Thomas Ritchie, a securities investigator for the Alberta Securities Commission, found that two $11 million properties Klytie’s claimed to own in Vancouver, British Columbia, didn’t exist. A home the company claimed was worth $3.8 million was actually valued at $150,000. And the company didn’t own a large shopping mall it claimed.

The Alberta Securities Commission fined the company $220,000 and forbid it from selling securities in Alberta for 25 years, according to a June 5, 2007, settlement agreement.

Sharkey said he didn’t do any work in Canada for the company.

Jefferson County prosecutors charged Sharkey with five counts of securities fraud and one count of theft in 2007. He received a two-year deferred sentence in April 2008. Two owners of Klytie’s, including Friedman, also were indicted.

Sharkey was allowed to move to Wisconsin midway through his deferred sentence. Charges were dismissed when his term was completed.

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Despite the fact he continues to receive restitution payments, Severino is critical of Wausau officials who approved Sharkey’s involvement in their project.

“They are doing an injustice to their city,” he said Friday. “I would demand that they do a background check on everyone involved.”

But Sharkey said the experience of being duped himself taught him a valuable lesson of needing to do “one’s own due diligence.”

“This unfortunate legal matter from more than 10 years ago has been resolved and will have no impact on the Riverlife project,” Sharkey wrote.

“All potential investors and lenders are aware of what occurred and the position I was placed in as an unwitting investor and employee of Klytie’s.”

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